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Author: 


Phillips,  John  Burton 


Title: 


Freight  rates  and 
manufactures  in  Colorado 

Place: 

Boulder 

Date: 

1909 


91'^^)SP'l 


MASTER    NEGATIVE   # 


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■. .,' 


.A. 


Phillips,  John. Burton,  1866- 
•  Freight  rates  and  manufactures  in  Coloradof 
a  cliapter  in  edonomio  history,  by  John  Biirton 
Phillips...  Boulder,  Col.,  1909 • 
62  p.   tables.  27  cm. 

Reprint  from  the  University  of  Colorado 
Studies,  Deoenber  1909 • 


• 


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FILMED  BY  PRESERVATION  RESOURCES.  BETHLEHEM.  PA. 


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MAIN  ENTRY:    Phillips.  John  Burton 


Freight  rates  and  manufactures  in  Colorado 


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Freight  Rates  and  Manufactures 

in  Colorado 


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A  Chapter  in  Economic  History 


By 
JOHN  BURTON  PHILLIPS,  Ph.D, 

Professor  of  Economics  and  Sociology 
in  the  University  of  Colorado 


LIBRARY 
SCHOOL  OF  BUSINESS 


Reprint  from  the 

University  of  Colorado  Studies,  December  1909, 

Boulder,  Colorado 


X 


3,p- 


LIBRA  A  Y 
SCHOOL  OF  BUSINE 


FREIGHT   RATES   AND    MANUFACTURES    IN 
COLORADO:     A    CHAPTER    IN 
ECONOMIC  HISTORY 


By  John  Burton  Phillips 


O  V/  J^iA^/^^>V^ 


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CONTENTS 

Chapter  I.    Introduction  ^^^^ 

Denver  as  a  Distributing  Centre 9 

Importance  of  Long  Haul 9 

Dependence  of  Rocky  Mountain  Region  on  Railroads 9 

Power  of  Railroad  Manager '° 

Interest  of  Railroad  Manager  in  Dividends i® 

Carrying  Industry  Desires  Haulage    ......•••  'o 

Localization  of  Manufactures  in  East  Increases  Haulage       .       .       .       .  lo 

Manufactures  in  East;  Raw  Material  Production  in  West   .       .       .       .  ii 

Transportation  Companies' Interest  in  This  Condition  .       .       .       .  n 

Population  Moves  West  More  Rapidly  than  Manufactures    .       .       .       .  n 

Heaviest  Denver  Shippers  Formulated  First  Schedule  of  Freight  Rates      .  ii 

This  Schedule  Accepted  by  Railroad i^ 

Industrial  Characteristics  of  Mining  Population m 

Beginning  of  Local  Manufacture '3 

Complaints  against  tiie  Freight  Rates I3 

Legislative  Investigation  of  1885 ^4 

Chapter  11.    Testxmqny  of  Manufacturers  and  Merchants 

p^Ag^  _Paper-Mill  Project  Defeated  by  Threat  to  Lower  Rates        .       .  15 

'     Saddlery.— R&te  on  Raw  Material  Higher  than  on  Manufactured  Goods    .  15 
Freight  Rate  Lower  from  East  through  Denver  to  California  than  to 

Denver ^ 

Lower  Rates  to  Cheyenne  and  Ogden  than  to  Denver    ....  17 

Whip  Manufacture  Discouraged  by  High  Rates 18 

Evils  of  RaUroad  Pool 18 

5 


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•avM^a^a*- 


UNIVERSITY   OF  COLORADO  STUDIES 

Alleged  Railroad  Freight  Inspector ^ 

Rebating  System  and  Its  Effects 

Matefe«.-Manufacture  Begun  but  Discouraged  by  Rates  '  *  *  '  '° 
Monopoly  of  Diamond  Match  Company 

5aa/>— Rates  Discouraged  Maunfacture 

Kirk  and  Company's  Monopoly 

Iron  -Eariy  Development  of  Iron  Manufacture  Needed  in  Mining  Region  .  22 
Freight  Rates  Same  on  Raw  Material  and  Manufactured  Articles  .  23 
Discrimination  against  Denver  as  Distributing  Point      ....     25 

p^^._Reduction  in  Price  after  Erection  of  Denver  Mill  .  .  .  .27 
Combination  of  DuPont  Monopoly  with  Railroads 27 

Ghss  -Railroad  Threat  to  Lower  Rate  on  Incoming  Glass  ....  28 
Operation  of  Factory  Raised  Denver  Rates  to  Tributary  Pomts   .       .     29 

Carm^«.-Rate  on  Materials  Higher  than  on  Manufactured  Article         .    30 
Building   Material    and    Furniture.     Boxes.     Brooms.-?.^i^    Same    on 

Unfinished  and  Fmished  Furniture       .       .       •       •       •       •       -31 

Rate  on  Mattresses  Favored  Manufacturer  at  Missouri  River       .       .     33 

Cemen/ ami  Terra  Co/to.-Difficulty  m  Distribution  of  Product    ...     34 

Grocm«.— Table  of  Discriminatory  Rates 3^ 

Coo/ Mining.— Complaints  of  Coal  Mine  Operators       .       .  '     ^ 

Railroads  Engaged  m  Coal  Mining 39 

Monopoly  Price  Discouraged  New  Manufacturers 4 

Chapter  HI.    Testimony  of  Railroad  Officials 

Santa  Fe  Discriminated  against  Goods  Made  in  Colorado     .       .       .       •  4i 

Hieher  Rates  from  Denver  than  from  Missouri  River     .       •       •       '       '  ^^ 

Rio  Grande  Favored  Colorado  Consumer  Rather  than  Manufacturer  42 

Nail  Rate  Reduced  to  Favor  Colorado  Coal  and  Iron  Co.      ...  43 

Origin  of  Colorado  Coal  and  Iron  Co.    Railroad  Assistance     ^^.       .  44 

Attitude  of  Union  Pacific *        xe 

Pressure  on  Railroads  by  Eastern  Manufacturers    .       .       •       •       v,  45 
Letter  of  Pool  Commissioner  Promising  Aid  to  Manufacturers     .       .     4^ 

Chapter  IV.    1885-1896 

Law  Creating  Railroad  Commissioner  and  Its  Repeal -49 

Complaints  against  Freight  Rates  by  Presidents  of  Denver  Chamber  of    ^^ 
Commerce 


,  \...^i 


I 


■v^ 


/ 


i 


FREIGHT    RATES  AND  MAGUFACTURFS   IF  COLORADO  7 

Freight  Rate  Attack  on  Paper-Mill 5° 

Resolution  of  Citizens'  League  against  Freight  Rates 5^ 

Table  of  Commodity  Rates  to  Colorado  and  California         ....  52 

Table  of  Commodity  Rates,  California  to  Colorado  and  Missouri  River     .  54 

Table  of  Distributive  Rates  from  Colorado 54 

Discrimination  in  Favor  of  Missouri  River  Points 55 

Peculiarities  of  Rate  Discrimination 5" 

Difficulties  of  Colorado  Jobbers 57 

Discrimination  against  Mattress  Manufacture 59 

Discrimination  agamst  Iron  Manufacture  in  Pueblo 60 

Inter-State  Commerce  Commission's  Order  to  Reduce  Rate  on  Iron    .       .  61 

Commission's  Order  Vacated  by  United  States  Circuit  Court        ...  61 

Failure  of  Denver  to  Secure  Missouri  River  Commodity  Rates     ...  61 


w 

'. 


V 


^^ 


V 


FREIGHT  RATES  AND  MANUFACTURES  IN 

COLORADO 

Chapter  I.    Introduction 

The  geographical  situation  of  the  city  oiE  Denver  and  its  function  as 
the  distributing  centre  of  the  Rocky  Mountain  region  have  made  the 
question  of  transportation  of  paramount  importance.  Denver  is  i,ooo 
miles  from  Chicago  and  i,8oo  from  San  Francisco.  It  is  also  about 
1,000  miles  from  the  Gulf  points  and  1,700  from  Seattle.  From  Missouri 
River  points  the  distance  is  600  miles.  It  thus  appears  that  the  city 
is  the  only  largely  populated  centre  within  a  vast  territory.  Further, 
the  entire  region  between  the  Missouri  River  and  the  Rocky  Mountains 
is  not  densely  populated.  Local  traffic  is  therefore  not  important 
and  the  feature  that  has  appeared  most  decisive  to  the  railroad  companies 
has  always  been  the  long  haul.  When  the  Pacific  Railroad  was  opened 
in  1867,  it  was  supposed  that  Cheyenne  would  be  the  future  metropolis 
of  the  Rocky  Mountain  region  and  little  attention  was  paid  by  the  rail- 
roads to  the  thought  of  building  a  road  from  the  Union  Pacific  southward 
to  Denver,  then  a  town  of  some  4,000  inhabitants.  It  must  be  remem- 
bered that  the  gold  craze  which  was  so  powerful  a  factor  in  filling  Colo- 
rado with  population  in  the  years  immediately  following  1859  had  spent 
its  force  and  thousands  of  the  disappointed  gold  hunters  had  returned 
to  their  homes  in  the  east. 

The  men  who  had  stayed  in  Colorado  knew  the  value  of  the  region 
as  a  mining  state  and,  with  a  thorough  belief  in  the  future,  sought  to 
secure  railroad  connection  with  the  outside  world.  They  began  at  once 
to  raise  the  funds  necessary  for  building  a  railroad  from  Cheyenne  to 
Denver,  and  after  many  disappointments  and  difficulties,  the  road  was 
opened  for  trafl&c  on  June  22,  1870.  The  road  was  built  purely  by  local 
enterj)rise.  By  September  of  the  same  year  another  railroad,  the  Kansas 
Pacific,  reached  the  city  and  thus  Denver  had  satisfactory  communica- 
tion with  the  outside  world  and  by  two  different  routes. 

The  history  of  no  city  shows  more  clearly  the  immense  power  of  the 
railroad  managers  over  the  growth  and  development  not  only  of  cities 

9 


lO 


UNIVERSITY  OF  COLORADO  STUDIES 


but  also  of  large  sections  of  the  country.  As  already  indicated  the  geo- 
graphical situation  of  the  city  and  the  country  tributary  to  it  were  in 
great  degree  absolutely  dependent  upon  the  freight  rate  for  any  reason- 
able growth.  Water  communication  which  has  guaranteed  fair  rates 
to  so  many  places  didjiot  exist;  navigation  of  the  air  was  not  possible; 
haulage  by  wagon  was  so  expensive  that  it  was  prohibitory  for  all  except 
the  most  valuable  kinds  of  freight.  The  Rocky  Mountain  region  was 
therefore  absolutely  dependent  upon  the  mercies  of  the  railroad  manager. 
The  history  of  railroading  in  the  United  States  shows  clearly  enough 
that  the  railroad  manager  is  guided  in  his  action  by  the  interests  of  the 
men  that  own  the  railroad.  The  men  that  build  and  operate  a  railroad 
are  entitled  to  make  a  profit  out  of  their  work  and  hence  it  happens  that 
the  manager  is  primarily  interested  in  what  dividends  he  is  able  to  secure. 
Railroads  are  built  for  the  purpose  of  hauling  commodities  primarily 
and  anything  that  tends  to  make  communities  self-sufficient  and  thus 
eliminate  the  need  of  transporting  goods  to  them  is  not  likely  to  receive 
aid  and  support  from  the  men  who  have  invested  their  money  in  and 
are  devoting  their  energies  to  railroads.  If  each  community  in  the 
United  States  began  in  considerable  measure  to  manufacture  the  things 
that  are  consumed  in  that  particular  section,  and  if  the  raw  materials 
of  manufacture  were  not  required  to  be  hauled  in,  it  is  at  once  apparent 
that  there  would  be  some  diminution  in  the  amount  of  freight  carried  by 
the  railroads  that  are  now  serving  these  places  in  the  capacity  of  carriers. 
It  is  therefore  to  the  interest  of  the  carrying  industry  that  manufactures 
should  not  spread  over  all  sections  of  the  United  States.  IiLlhe  railroad 
manager's  point  of  view,  it  is  more  to  his  financial  interest  to  have  manu- 
factures largely  localized  in  the  eastern  part  of  the  country  and  to  keep 
the  West  engaged  in  the  production  of  raw  materials.  By  accomplishing 
this,  he  will  be  able  to  furnish  enormous  traffic  for  the  carrying  industry. 
He  will  haul  the  manufactured  goods  from  the  East  to  the  raw  material 
producing  regions  of  the  West  and  vice  versa.  This  will  greatly  increase 
his  profits  as  long  as  the  industries  remain  thus  localized.  This  brings 
to  mind  the  navigation  laws  of  the  seventeenth  century  and  the  prohibi- 
tion of  manufactures  that  preceded  the  revolutionary  war.  The  interest 
of  the  mother  country  was  to  keep  the  colonies  raw  material  producing 


FREIGHT  RATES  AND  MANUFACTURES  IN  COLORADO 


II 


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regions,  and  in  modern  times  the  East  and  the  railways  have  had  the 
same  interest  in  preventing  the  growth  of  manufactures  in  the  western 
states.  That  this  interest  has  been  in  some  degree  effective  appears 
by  a  study  of  the  increase  of  population  and  the  movement  of  manufac- 
tures toward  the  West  in  the  United  States. 

From  1850  when  the  domestic  system  of  manufacture  gave  way  to 
the  factory,  the  progress  of  manufacture  toward  the  West  has  not  kept 
pace  with  the  westward  movement  of  population.  In  1850,  the  centre 
of  manufactures  was  a  little  south  of  the  middle  of  Pennsylvania,  slightly 
north  and  west  of  Harrisburg,  while  the  centre  of  population  was  just  west 
of  the  eastern  boundary  line  of  Maryland,  being  thus  considerably  east 
of  the  centre  of  manufactures.  By  1900,  the  centre  of  population  had 
moved  westward  to  a  point  almost  south  of  Indianapolis  while  the  centre 
of  manufactures  was  a  little  east  of  a  line  from  Columbus  to  Toledo. 
During  the  same  period  manufactures  increased  from  $1,000,000,000 
in  1850  to  $13,000,000,000  in  1900.  This  shows  a  marked  concentration 
in  the  manufacturing  industry. 

On  June  23,  1870,  the  next  day  after  the  first  locomotive  arrived  in 

Denver,  there  was  a  meeting  of  the  heaviest  shippers  to  consider  the 

matter  of  freight  rates.     On  the  following  day  another  meeting  of  the 

same  persons  was  held  and  a  schedule  of  rates  was  agreed  upon.    This 

schedule  was  presented  to  the  superintendent  of  the  railroad  who  replied 

on  June  28  as  follows: 

Denver  Pacific  Railway 
Superintendent's  Office 

Denver  Colo.,  June  28,  1870 
Fred.  Z.  Solomon,  Esq.,  Chairman  Business  Men's  Meeting,  Denver,  Colo. 

Sir:  The  proceedings  of  the  meetings  of  the  heaviest  shippers  of  this  place, 
held  in  this  city  June  23  and  24,  were  handed  me  by  your  secretary,  Mr.  McDonald. 
The  recommendatioi.s  of  the  meetings  were  presented  by  me  to  the  proper  railroad 
officials,  and  the  rates  proposed  by  your  meetings  for  carrying  freights  have  been 
adopted  and  will  be  published  in  a  few  days.  These  rates  will  apply  to  all  freight 
which  has  come  into  Denver  over  the  Denver  Pacific  Railway  since  June  25,  and 
if  any  other  rate  has  been  paid,  the  matter  will  be  properly  adjusted  upon  applica- 
tion to  me  at  this  office. 

Very  respectfully, 

Your  obedient  servant, 

C.  W.  Fisher, 

Supt.  D.  P.  R.  R. 


13 


UNIVERSITY  OF  COLORADO  STUDIES 


. 


In  reply  to  this  the  committee  having  the  matter  in  charge  adopted 
the  following  resolution: 

Resolved,  That  the  reply  of  Col.  Fisher  to  the  request  of  the  shippers  of  Denver 
relative  to  freight  tariff  over  the  road  of  which  he  is  suj)erintendent  is  perfectly 
satisfactory,  and  our  thanks  are  due  for  the  prompt  and  cheerful  compliance  with 
our  request.  ^^^  ^   Solomon,  Chairman. 

F.  A.  McDonald,  Secretary. 

After  publishing  this  correspondence,  the  editor  of  the  Colorado 
DaUy  Tribune  remarked  that  this  was  an  auspicious  beginning  as  it 
proved  that  the  railroad  company  and  the  merchants  were  dwelling 
together  in  unity.    He  thought  this  was  a  forerunner  of  what  might  be 

expected  in  the  future.' 

It  is  true  that  this  looked  like  an  auspicious  beginning  but  there  were 
certain  conditions  that  made  it  to  the  interest  of  the  railroads  apparendy 
to  keep  the  prices  for  transporting  freight  to  Colorado  high.  The  roads 
had  been  built  in  advance  of  the  needs  of  the  time.  There  was  no  popu- 
lation along  Jieir  line  to  furnish  them  with  any  business.  If  their  stock 
w^^Tto'b^me  a't  all  valuable,  they  must  do  their  utmost  to  secure  as 
large  a  revenue  as  possible  from  all  shippers  who  patronized  them. 
Therefore,  there  was  every  inducement  for  them  to  raise  the  rates  and 
keep  them  high.  There  was  also  the  inducement  to  keep  new  manufac- 
tures from  locating  in  Colorado  so  as  to  supply  the  home  market.  This 
would  reduce  the  revenue  of  the  roads  from  hauling  in  freight. 

There  was  also  another  cause  operating  to  prevent  freight  rates  favor- 
able to  the  establishment  of  manufactures  and  that  was  the  leading 
occupation  of  the  country.  Manufacturing  is  a  routine  industry;  it 
takes  time  and  patience  and  does  not  furnish  the  opportunity  to  "  strike 
1  it  rich"  suddenly.  Wealth  made  in  manufacturing  comes  slowly  as 
the  result  of  years  of  patient  attention  and  devotion  to  the  details  of  the 
business  and  to  the  development  of  a  large  market  by  advertising  and 
so  forth  This  industry,  therefore,  requires  a  different  type  of  mind  from 
that  needed  in  such  an  industry  as  mining.  After  the  railroad  had 
reached  Denver,  the  people  that  came  for  the  next  ten  years  or  more  were 
very  largely  persons  interested  in  one  way  or  another  in  the  mmmg 

1  Coloradc  DaUy  Tribune,  June  29.  1870. 


FREIGHT  RATES  AND   MANUFACTURES   IN   COLORADO 


13 


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development  of  the  state.    They  did  not  come  to  Colorado  for  the  pur- 
pose of  starting  a  manufacturing  plant.     In  fact,  the  rewards  from  the 
mining  industry  had  become  sufficiently  well  known  to  make  most  of  the 
migrating  population  turn  their  energies  in  that  direction  rather  than 
pay  much  attention  to  the  establishment  of  manufactures.    The  persons, 
then,  that  came  to  the  state  in  the  earlier  decades  were  persons  of  the 
adventurous  type  of  mind  and  not  persons  accustomed  to  the  monotonous 
routine  of  workaday  industry.     A  population  of  this  sort  largely  engaged  / 
in  the  mining  industry  expects  that  everything  will  be  high.     A  mining 
region  is  accustomed  to  pay  high  prices  for  all  things  as  the  rewards  ; 
of  industry  in  the  search  for  gold  are  apt  to  be  high  and  this  increases 
the  cost  of  all  other  things  as  workers  in  other  lines  must  be  paid  as  much 
as  the  average  returns  of  the  gold  seeker.     If  they  are  not  so  paid  they  ^ 
will  also  engage  in  the  search  for  the  precious  metals. 

This  was  the  situation  in  Colorado  for  the  first  decade  and  more  \ 
after  the  railroad  reached  Denver.     Mining  was  the  leading  occupation. 
No  one  was  paying  much  attention  to  manufacturing;  the  returns  from 
mining  were  sufiiciently  large  to  make  that  the  paramount  industry,  j 
Therefore  the  few  manufacturing  concerns  which  did  start  were  soon  i 
disposed  of  by  the  adjustment  of  discriminatory  rates  on  the  part  of  the 
railroad  companies.    After  the  factories  started,  the  rates  were  lowered 
so  that  goods  could  be  brought  in  from  the  East  more  cheaply  than  they 
could  be  produced  in  Denver.    This  matter  did  not  attract  any  par- 
ticular attention  during  the  early  period  as  mining  was  occupying  too 
prominent  a  place.    As  Denver  increased  in  population,  however,  and 
it  was  seen  that  it  was  destined  to  be  one  of  the  large  cities  of  the  country, 
and  as  it  also  became  apparent  that  the  cheaper  forms  of  mining  were  no 
longer  efficient,  then  it  was  evident  that  manufacturing  in  Colorado 
would  be  an  advantage  to  the  city  and  state.    Therefore,  public  atten- 
tion began  to  be  directed  toward  whatever  hindrances  there  were  to  the 
development  of  this  important  industry.    The  freight  rate  difficulty 
was  at  once  complained  of.    Discussion  of  the  injustice  which  it  was 
alleged  the  city  and  state  were  suffering  at  the  hands  of  the  railroads  was 
carried  on  in  the  newspapers  and  in  January,  1885,  the  legislature, 
almost  immediately  after  convening,  appointed  a  special  railroad  com- 


^ 


14 


UNIVERSITY  OF  COLORADO  STUDIES 


mittee  of  the  house  of  representatives  to  investigate  the  freight  rate  situa- 
tion and  ascertain  if  possible  whether  or  not  the  railroads  were  unfavorable 
to  the  establishment  of  manufactures  in  Colorado.  This  committee 
occupied  several  weeks  in  examining  witnesses,  both  shippers  and  rail- 
road agents  and  officers,  in  an  honest  endeavor  to  ascertain  the  facts  of 
the  existing  situation  and  also  the  attitude  of  the  railroads  toward  the 
establishment  of  manufacturing  industries  in  Colorado.  Much  impor- 
tant testimony  was  taken  and  great  light  was  thereby  thrown  upon  many 
phases  of  the  question.  From  this  testimony  important  data  bearing 
on  the  relation  of  the  freight  rate  to  manufactures  has  been  summarized 
below. 


« 


k'l 


Chapter   II.    Testimony   of   Manufacturers    and   Merchants 

Paper 
In  1884,  a  plan  was  matured  to  build  a  paper-mill  in  Denver.  Mr. 
Woodworth,  a  gentleman  who  was  familiar  with  the  manufacture  of 
paper  in  the  East  and  who  had  been  spending  the  summer  in  Colorado, 
saw  the  possibilities  in  the  manufacture  of  paper  in  the  city  and  decided 
to  set  up  a  mill.  He  convinced  some  of  the  local  capitalists  that  the 
enterprise  would  pay.  A  lot  was  selected  and  he  went  East  to  buy  the 
necessary  machinery.  The  capital  of  the  establishment  was  to  be 
$250,000.  When  the  railroad  officials  learned  of  the  scheme  they 
informed  Mr.  Woodworth  that  in  case  a  paper-mill  was  started  in  Denver 
they  would  put  the  freight  rates  on  incoming  paper  so  low  that  he  could 
not  afford  to  manufacture.^ 

Saddlery  and  Hardware 
Mr.  E.  B.  Light  who  was  engaged  in  the  saddlery  business  in  Denver 
in  1885  explained  to  the  committee  the  effect  of  the  freight  rates  on 
leather  manufacture.     It  appears  from  his  testimony  that  the  rate  on 
raw  material  was  generally  higher  than  on  manufactured  goods.    There 
was  at  that  time  a  combination  in  the  saddlery  hardware  business  and 
the  trust  would  lay  down  the  same  hardware  any  place  east  of  the  Mis- 
sissippi River  at  the  same  price.    The  dealer  at  the  River  got  the  goods 
therefore  at  the  price  paid  by  the  dealer  in  Newark,  N.  J.    The  freight 
on  one  hundred  dollars  worth  of  such  hardware  from  the  Missouri  River 
to  Denver  was  about  one  fourth  of  the  value,  so  that  the  Denver  dealer 
had  to  pay  $125  for  what  the  dealer  at  the  River  secured  for  $100.  ^    The 
same  rate  on  raw  and  manufactured  goods  was  a  loss  to  the  railroad 
according  to  Mr.  Light  as  the  amount  of  money  invested  in  a  harness  if 
invested  in  the  raw  material  and  this  shipped  in  from  the  River  would 
yield  a  large  amount  in  freight  as  the  raw  material  was  three  or  four 
times  as  heavy  as  the  finished  product.     This  was  true  of  either  leather 

»  Evidence,  Special  Railroad  Committee,  pp.  13,  14,  1885. 
« Ibid.,  p.  84,  1885. 

IS 


\  t 


I 


i6 


UNIVERSITY  OF  COLORADO  STUDIES 


or  saddlery  hardware.  From  the  railroad  point  of  view,  however, 
cheaper  rates  on  raw  materials  might  have  tended  strongly  to  encourage 
the  growth  of  manufacture  in  Denver,  and  ultimately  make  for  the  self- 
sufficiency  of  the  region.     This  might  mean  less  freight  in  the  future. 

At  this  time  Mr.  Light's  concern  had  travelers  making  the  towns  in 
Texas,  New  Mexico,  Arizona,  Kansas,  Nebraska,  Idaho,  Montana, 
and  they  had  gone  even  as  far  as  Hailey,  Oregon.  The  goods  sold  over 
this  large  territory  were  certain  specialties  that  were  well  adapted  to  the 
uses  of  this  particular  region.  The  competition  which  these  agents 
encountered  was  particularly  with  the  California  dealers.  Goods  could 
be  shipped  from  the  East  to  the  California  houses  more  cheaply  than 
they  could  be  shipped  to  Denver.  The  goods  thus  went  through  to  the 
Pacific  points  cheaper  than  they  could  be  stopped  off  at  Denver.  In 
this  way  the  San  Francisco  dealer  could  get  into  Idaho  and  other  parts 
of  the  West  and  undersell  the  Denver  man.  Goods  were  thus  carried 
across  the  continent  and  then  shipped  back  again  to  the  points  reached 
by  the  San  Francisco  trade.  It  was  the  custom  of  Mr.  Light's  firm  to 
sell  to  certain  dealers  in  various  parts  of  the  states  above  mentioned  and 
have  the  goods  shipped  directly  from  the  factory  to  the  dealer  as  the  rate 
would  have  greatly  raised  the  price  had  the  goods  been  shipped  via 
Denver.  This  was  considered  bad  business  by  the  wholesaler  as  it  was 
said  to  bring  the  manufacturer  and  the  dealer  into  closer  relations  and 
in  the  course  of  time  the  dealer  would  buy  directly  from  the  eastern 
manufacturer,  and  the  Denver  jobber's  trade  would  disappear. 

In  1883,  Mr.  Light  had  a  drummer  in  Texas  who  found  he  could 
sell  a  large  quantity  of  wooden  stirrups  that  were  made  in  Ohio.  By 
bringing  them  in  south  of  the  pool  lines  and  getting  them  to  Fort  Worth, 
they  could  be  handled  for  $1 .  10  a  hundred.  Bringing  them  to  Denver 
and  shipping  them  thence  to  Fort  Worth  would  cost  $5 .  10.  Mr.  Light 
presented  the  case  to  the  freight  agent  of  the  Santa  Fe  explaining  that  he 
could  handle  a  large  amount  of  these  stirrups  and  asking  if  the  railroad 
would  not  give  the  same  rate  on  them  as  was  then  given  on  wooden  ware, 
namely  $0.60  a  hundred.  The  agent  said  he  would  write  to  the  head 
office  at  Topeka  and  find  out  about  the  matter.  Before  this  time  Mr. 
Light's  concern  had  been  called  the  Denver  Whip  and  Collar  Company, 


FREIGHT  RATES  AND  MANUFACTURES  IN  COLORADO 


17 


*  ':  ( 


but  the  name  had  recently  been  changed  to  the  Denver  Manufacturing 
Company.  When  this  was  explained  to  the  agent  he  said,  "The  name 
will  kill  this  thing  because  you  are  manufacturers."' 

Mr.  Light  asked  to  be  allowed  to  ship  in  carload  lots  and  then  asked 
if  they  would  make  him  a  special  rate  on  what  he  shipped  south  of 
Emporia  which  was  a  pool  point.  The  railroad  would  then  get  a  haul 
to  Denver  and  half  way  back  to  Kansas  City  and  none  of  the  goods  would 
be  sold  in  the  territory  of  the  pooled  roads.  This  proposition  v/as  de- 
clined on  the  ground,  according  to  the  statement  of  the  freight  agent  of 
the  company,  that  Mr.  Light  was  a  manufacturer.  The  reply  from 
Topeka  was  unfavorable  as  had  been  anticipated. 

As  an  indication  of  the  policy  of  the  railroads  toward  the  development 
of  manufactures  in  the  Rocky  Mountain  region  at  this  time  the  following 
incident  is  worth  noting.  Mr.  Light  bought  a  carload  of  blankets 
in  Philadelphia  in  1884.  The  freight  on  these  blankets  was  $175  from 
Philadelphia.  Of  this  amount  the  cost  of  freight  from  Philadelphia 
to  Chicago  was  $45,  and  from  Chicago  to  Denver,  $130.  For  the  first 
half  of  the  journey  the  freight  was  one  fourth  of  the  total,  the  second 
half,  from  Chicago  to  Denver,  three  fourths  of  the  total  freight  cost.^ 

The  efforts  of  the  Union  Pacific  to  build  up  Cheyenne  and  interfere 
with  the  progress  of  Denver  which  had  been  the  policy  of  that  railroad 
in  the  early  days  lasted  till  some  time  previous  to  1885  and  the  rates 
enjoyed  by  the  merchants  in  that  town  were  much  more  favorable  than 
the  rates  granted  to  the  Denver  dealers.  Goods  shipped  to  Georgetown 
and  Central  City  came  via  Cheyenne.  The  Union  Pacific  would  not 
make  the  same  rate  to  Denver  as  it  was  a  pool  point  and  Cheyenne  was 
not.  If  goods  were  shipped  to  Denver  the  Union  Pacific  would  get  only 
one  fourth  of  the  freight,  but  if  shipped  to  Cheyenne,  this  road  would 
get  all.  Such  a  condition  prevented  the  increase  of  manufacture  and  trade 
in  Denver.  If  the  Union  Pacific  hauled  to  Denver,  it  would  get  one 
fourth  of  the  freight,  but  if  it  hauled  to  Ogden,  it  would  get  all  the  freight. 
This  condition  accounts  for  the  lower  rates  from  the  Missouri  River  to 
Ogden  and  Salt  Lake  than  to  Denver. 

Mr.  Light  formerly  manufactured  whips  in  Westfield,  Massachusetts. 


"i'- 


Evidence,  Special  Railroad  Committee,  p.  83. 


•  Ibid.,  p.  84. 


I 

I 

I 


i8 


UNIVERSITY  OF  COLORADO  STUDIES 


He  told  the  committee  that  he  could  make  whips  more  cheaply  in  Denver. 
This  was  because  factory  workers  were  cheap  in  Colorado  as  so  many  per- 
sons had  come  out  from  the  East  in  search  of  health  and  while  they  were 
not  fitted  to  do  the  heavy  work  of  the  building  trades  or  mines,  were  never- 
theless able  to  do  the  lighter  work  of  the  factories.^  He  also  stated  that 
there  was  no  reason  why  he  should  not  make  whips  in  Denver  and  sell 
them  to  the  entire  tributary  country  save  only  the  adverse  railroad  rates. 
He  had  previously  had  considerable  trade  in  Trinidad  but  of  late  it 
had  greatly  fallen  off.  The  merchants  there  said  that  they  could  get 
the  goods  more  cheaply  by  shipping  them  in  from  the  East  than  they  could 
get  them  from  Denver. 

The  general  conditions  in  Denver  in  1885  were  not  encouraging  to 
the  manufacturing  industries.  Such  industries  were  at  that  time  declin- 
ing according  to  testimony  before  the  special  railroad  committee.  The 
cause  of  this  decline  was  said  to  be  the  railroad  pool.  The  discrimi- 
natory rates  against  Denver  and  in  favor  of  Cheyenne,  Ogden  and  Salt 
Lake,  are  evidence  of  the  injury  to  the  manufacturing  interests  of 
Denver  wrought  by  the  pool.  It  was  affirmed  before  the  committee  that 
in  the  days  when  there  was  only  the  old  Kansas  Pacific  to  bring  in  the 
goods  from  the  Missouri  River,  it  was  possible  to  have  the  commodities 
come  in  more  reasonably  than  in  1885  when  the  city  had  four  railroads. 
It  was  charged  that  the  classification  of  freight  was  almost  constantly 
changed  and  the  rates  raised  in  this  way  every  time  the  trafl&c  would 
bear  a  higher  charge.  The  railroad  companies  were  said  to  have  had 
an  inspector  at  the  freight  house  whose  business  it  was  to  open  boxes 
and  ascertain  if  freight  was  properly  classified.  If  a  few  first  class 
articles  were  found  in  a  box  of  mixed  freight  the  whole  box  was  charged 
up  as  first  class  freight.  The  railroads  regarded  it  as  smuggling.* 
This  was  especially  the  case  in  the  matter  of  saddlery.  If  ten  dollars 
worth  of  harness  rosettes  were  placed  in  a  $300  box  of  saddlery  hard- 
ware, the  whole  shipment  would  be  put  up  to  first  class  rates,  that  being 
the  class  to  which  harness  rosettes  belonged.  In  the  East  harness  rosettes 
were  third  class  freight.^ 

'  Evidence,  Special  Railroad  CommiUee,  p.  84. 

» Ibid.,  p.  85.     Improper  freight  classification  is  a  serious  fraud  practiced  on  railroads.     An  inspector 
may  have  been  necessary.     See  Report  of  the  United  States  Industrial  Commission,  Vol.  IX,  p.  288,  1902. 
J  Ibid.,  p.  84,  1885. 


FREIGHT  RATES  AND  MANUFACTURES  IN  COLORADO 


19 


These  various  railway  practices  were  not  without  their  effect  on  the 
business  of  the  city.  It  was  stated  to  the  legislative  committee  that  in 
1885,  25  per  cent,  less  mechanics  were  employed  than  was  the  case  two 
years  before.  The  number  of  men  in  the  iron  industries  was  also 
reduced  in  the  same  proportion.  Nothwithstanding  these  conditions, 
many  of  the  business  men,  especially  wholesalers,  were  at  that  time 
friendly  to  the  railroads.  The  rebating  system  was  then  in  force  and 
as  many  of  these  persons  were  in  the  habit  of  receiving  rebates  which 
enabled  them  to  thrive  while  their  competitors  were  worsted,  they  natu- 
rally remained  friendly  to  the  railroad  companies.  A  canner  of  vegetables 
agreed  to  sell  to  wholesalers  as  cheaply  as  they  could  buy  in  the  East 
plus  the  freight.  They  greatly  astonished  him  by  the  information  that 
15  per  cent,  of  the  freight  should  be  deducted  as  this  was  their  rebate. 
It  is  said  that  several  of  the  merchants  wanted  high  rates  so  they  could 
profit  by  the  rebate  they  were  then  getting  and  at  the  same  time  be  pro- 
tected from  the  competition  of  new  firms  that,  were  it  not  for  this  dis- 
crimination, might  be  induced  to  start  business  in  the  city.  Rebating 
was  then  carried  on  in  other  cities  of  the  state  besides  Denver;  Mr. 
Light  told  the  committee  that  a  merchant  in  Leadville  showed  him  a 
check  for  $2,000,  that  being  his  rebate  during  a  certain  period.' 

Freight  rates  were  so  adjusted  at  this  time  that  the  Denver  merchants 
and  manufacturers  could  not  get  into  the  market  at  Cheyenne,  save  only 
in  those  cases  in  which  the  dealers  of  the  latter  city  wished  their  goods 
sent  with  great  dispatch.  In  such  cases  the  road  would  make  a  rate  that 
would  allow  the  Denver  dealer  to  sell  his  goods  in  Cheyenne.  Ex-Gover- 
nor Alva  Adams,  president  of  the  board  of  trade  at  Pueblo,  stated  in  an 
address  that  nails  made  by  the  Colorado  Coal  and  Iron  Company  if 
shipped  to  El  Paso  paid  a  rate  of  fifty  cents  a  keg.  If  these  nails  were 
bought  in  the  East  and  shipped  to  Pueblo,  the  freight  would  be  twenty- 
five  cents  a  keg.  If  they  were  reshipped  at  Pueblo  and  sent  to  El  Paso, 
the  freight  to  that  point  would  be  twenty-five  cents  more.  It  thus  appears 
that  at  that  time  the  manufacturer  of  nails  in  Pueblo  paid  the  'same  rate 
as  the  eastern  manufacturer  whenever  he  wished  to  ship  to  points  in 
what  might  be  called  country  tributary  to  his  manufactory.* 


'  Ibid.,  p.  84. 


'Ibid. 


FREIGHT  RATES  AND   MANUFACTURES  IN   COLORADO 


21 


20 


UNIVERSITY   OF   COLORADO   STUDIES 


Matches 
Mr.  James  D.  Davis  began  the  manufacture  of  matches  in  Denver 
in  1883     He  started  with  a  capital  of  four  or  five  thousand  dollars  and 
product  from  twenty-five  to  thirty  gross  a  day.      When  the  factory 
first  started,  matches  could  be  sold  to  the  merchants  at  $2 .  50  a  gross,  but 
he  had  to  sell  them  very  soon  at  $1 .  50  in  order  to  keep  his  trade,  as  the 
rates  were  reduced  on  matches  brought  in  from  the  East.    When  the 
factory  began  operations,  the  freight  rate  on  matches  was  $3.60  a  hun- 
dred    Very  soon  after  that  it  was  reduced  to  $2 .  60  a  hundred,  and  still 
laterit  became  the  practice  to  classify  matches  as  wooden  ware,  and  thus 
classified  the  rate  was  one  dollar  a  hundred.    When  the  factory  was 
started  the  profit  was  thirty-five  to  fifty  cents  a  gross  on  the  manufacture 
of  matches  at  the  Denver  factory,  but  after  the  profit  had  declined  to  five 
or  ten  cents  in  consequence  of  the  reductions  in  freight  rates,  it  was  not 
profitable  to  keep  the  factory  running  and  it  accordingly  closed  down 

ini885.'  ^_  ..r  J  I,  f 

One  of  the  prominent  merchants  of  the  city  of  Denver  testified  before 

the  committee  that  there  was  a  general  break  in  the  rate  in  the  year  1884, 
and  that  aside  from  matches,  soap  and  other  commodities  were  afiFected. 
That  this  rate  war  was  purely  a  railroad  contest  is  hard  to  prove.    It 
appears  from  evidence  before  the  same  committee  that  Kirk  and  Company 
were  trying  to  starve  out  the  small  manufacturers  of  soap  at  this  time. 
It  is  also  true  that  the  Diamond  Match  Company  had  a  monopoly  more 
or  less  complete  of  the  match  manufacture  of   the  United  States. 
$27  000,000  worth  of  matches  was  manufactured  in  1883,  and  of  this 
amount  $22,000,000  was  made  by  the  Diamond  Match  Company.    It 
is  easy  to  believe  that  so  large  a  shipper  as  the  Diamond  Match  Com- 
pany might  have  some  power  in  the  matter  of  dictating  the  rate  to  be 
charged  by  the  railroads.    After  the  winter  of  1884,  the  rates  on  matches 
and  other  commodities  were  again  raised.    The  match  factory  had  then 

gone  out  of  business.* 

Soap 
A  soap  factory  was  established  in  Denver  in  1876.    In  the  beginning 
the  factory  was  somewhat  handicapped  by  the  railroads  as  the  freight 


•  Evidence,  Special  RaUroad  Committee,  pp.  22,  23,  133.  i39- 


'  Ibid.,  p.  133' 


'J^C 


tVi 


( 


•■  II  ■• 


rates  on  the  raw  material  for  the  manufacture  of  soap  were  the  same  as 
the  rates  charged  for  bringing  in  soap.    The  factory  was  able  to  make 
a  large  product  but  experienced  the  greatest  difficulty  in  marketmg  it  as 
the  rates  were  so  made  by  the  railroads  as  to  favor  the  long  haul.    At 
this  time  there  were  four  roads  in  the  pool  and  the  division  on  a  carload 
of  freight  hauled  from  the  River  to  Colorado  points  would  be  more  than 
that  resulting  from  a  car  of  soap  shipped  from  Denver  to  Las  Vegas, 
or  other  points  in  the  neighboring  territory.  ■    After  the  factory  had  been 
running  for  three  or  four  months  and  had  turned  out  a  soap  that  would 
toke  the  market,  the  freight  rate  was  changed.    When  the  factory  was 
opened,  the  rate  on  soap  from  the  Missouri  River  to  Denver  was  one 
dollar  a  hundred  pounds  and  the  rate  from  Chicago  to  the  River  was 
forty  cents  a  hundred.    This  $1 .40  rate  to  Denver  was  lowered  as  soon 
as  the  factory  appeared  to  be  successful  to  60  cents  a  hundred  pound 

About  1880  another  soap  factory  was  started  in  Denver.  Some  time 
after  it  had  been  in  operation,  the  rates  on  soap  from  the  East  were  low- 
ered and  a  great  fall  in  the  price  occurred.  This  was  the  current  report 
in  Denver  at  the  time  of  the  investigation  by  the  legislative  committee 
and  a  number  of  witnesses  testified  before  the  committee.  It  was  the 
custom  to  buy  the  soap  that  was  shipped  into  Denver  with  the  freight 
prepaid  and  this  tended  to  surround  the  matter  with  more  mystery  and 
lend  color  to  the  suspicion  that  the  report  was  true.  At  any  rate  the 
factory  had  gone  out  of  business.  ^ 

The  evidence  taken  by  the  committee  shows  that  the  freight  rate, 
as  in  the  case  of  the  factory  in  1876,  was  the  same  on  soap  and  soda 
although  one  car  of  soda  would  make  many  cars  of  soap.  It  appeared 
that  there  were  good  opportunities  for  the  manufacture  of  soap  in  Denver. 
It  was  stated  by  witnesses  before  the  committee  that  the  price  of  grease 
in  Denver  was  lower  than  it  was  in  the  East. 

The  rate  on  soap  from  the  Missouri  River  to  Denver  was  maintained 
rigidly  and  honestly  from  November  i,  1882,  to  February  28,  1884. 
On  the  latter  date  rate  cutting  was  begun  and  one  cut  followed  another 
till  the  rates  were  30  or  40  per  cent,  of  the  published  freight  tariff, 


» Ibid.,  pp.  43.  218. 


•  Ibid.,  p.  131. 


=^ 


22 


UNIVERSITY  OF  COLORADO  STUDIES 


FREIGHT  RATES   AND  MANUFACTURES   IN  COLORADO 


Chicago  to  Denver.  On  August  i,  1884,  the  rates  were  restored  and 
the  plan  of  the  railroad  companies  was  to  exact  from  all  shippers  the 
same  rate.  It  was  found,  however,  that  Kirk  and  Company  had  a  con- 
tract which  ran  till  the  end  of  the  year  by  which  one  of  the  railroads 
running  from  Chicago  to  Council  Bluffs  agreed  to  ship  their  soap  below 
the  published  tariff.  Over  this  railroad  the  Union  Pacific  had  no 
control.  After  the  expiration  of  this  contract  Kirk  and  Company  had 
to  pay  the  same  rate  as  anybody  else.  It  was  the  practice  of  Kirk  and 
Company  to  sell  soap  in  Denver  and  Salt  Lake  as  cheaply  as  in  Chicago 
as  they  wished  to  break  up  the  manufacture  of  soap  in  the  West.  In 
this  the  committee  was  told  Kirk  and  Company  were  usually  successful. 
In  case  the  soap  makers  of  the  West  were  not  ruined  by  this  competi- 
tion, they  were  at  least  made  sufficiently  tractable  to  make  a  contract 
according  to  which  the  profits  were  divided  and  a  share  given  to  Kirk 
and  Company.  In  1885,  there  were  very  few  soap  factories  between  the 
Missouri  River  and  the  Pacific  Ocean.'' 

Iron 
Of  all  manufactures,  that  of  iron  is  the  most  important  and  its  devel- 
opment usually  takes  place  first  in  order  of  time  in  all  places  where  such 
industry  attains  much  magnitude.     The  attitude  therefore  of  the  govern- 
ment or  of  those  in  control  of  the  forces  affecting  the  iron  industry  toward 
the  manufacture  of  iron  is  a  clear  indication  as  to  whether  or  not  it  is 
desired  to  make  that  particular  section  a  manufacturing  centre.    In  this 
respect,  the  attitude  of  the  railroads  is  important  as  showing  their  desire 
for  manufacturing  to  develop  in  any  particular  place.    They  constitute 
certain  powerful  causes  in  aid  of  or  injury  to  manufactures,  and  it  is 
only  necessary  to  ascertain  whether  or  not  they  make  the  freight  rate  so 
as  to  discriminate  against  the  infant  manufacturing  industry  struggling 
to  get  started  in  the  newer  points  reached  by  the  road.     The  attitude  of 
the  railroads  therefore  toward  the  growth  of  the  iron  manufacture  at  any 
point  is  an  indication  of  their  general  attitude  toward  the  development 
of  the  other  manufacturing  industries  at  that  place.    What  was  the  atti- 
tude of  the  transportation  companies  toward  the  iron  industry  in  Denver 
and  Colorado  generally  in  the  earlier  period  ? 

'  Evidence,  Special  Railroad  Committee,  p.  225. 


23 


¥ 


n. 


(' 


Aside  from  any  interference  on  the  part  of  the  railroads,  the  natural 
situation  of  the  state  of  Colorado  and  the  nature  of  the  industry  that  was 
first  developed  in  the  state,  namely,  mining,  are  conditions  that  would 
of  necessity  have  started  the  iron  industry  at  an  early  date.  Heavy  iron 
machinery  was  greatly  needed  in  working  the  mines.  Such  machinery 
is  expensive  to  bring  in  from  points  i,ooo  miles  distant  as  its  weight  adds 
greatly  to  the  difficulty  in  transporting  it  and  freight  rates  must  of  neces- 
sity be  very  high.  In  1881-82,  just  after  the  great  mining  successes  at 
Leadville,  there  was  a  great  influx  of  mining  machinery.  It  was  shipped 
from  points  beyond  the  Missouri  River,  much  of  it  from  places  as  far 
distant  as  Pittsburgh,  and  the  average  rate  of  freight  was  said  to  have 
been  ten  cents  a  pound. ^  Thisjv£aS-Ai3L.£iiQrmous  tax  on^ the  mining 
industry  of  the  state.  There  can  be  little  doubt  that  this  great  dem^and 
for  the  products  of  iron  manufacture  would  have  stimulated  the  develop- 
ment of  that  industry  very  rapidly,  had  it  not  been  for  the  discriminating 
freight  rates. 

The  foundry  business  was  started  in  Denver  in  1871.  It  was  handi- 
capped by  the  rates  for  the  shipment  of  its  products.  The  freight  rates 
from  Denver  to  points  in  Arizona,  Montana  and  southern  California 
were  the  same  as  from  Missouri  River  points.  The  foundry  shipped  in 
pig  iron  and  coke  from  the  East  as  these  were  superior  in  quality  to  any 
made  in  Colorado  at  that  time.  The  freight  rate  on  these  products  was 
fifteen  dollars  a  ton.^ 

The  freight  rates  were  not  favorable  to  the  manufacturer  of  foundry 
products  then  nor  did  they  become  so  soon.  The  discrimination  in 
favor  of  the  places  on  the  Missouri  River  continued.  The  rates  were 
kept  as  high  on  the  raw  material  needed  for  use  in  iron  manufacture  as 
on  the  manufactured  product.  It  cost  as  much  in  every  case  except  that 
of  pig  iron  to  bring  in  the  raw  materials  as  it  did  the  manufactured 
machines.  This  is  especially  illustrated  by  the  rate  on  boilers.  On 
30  per  cent,  of  the  material  in  boilers,  the  rate  was  higher  than  the  rate 
on  the  manufactured  boiler.  The  rate  on  the  boiler  tubes  was  $1.15; 
on  the  finished  boiler,  the  rate  was  $1.00.^  Six  firms  were  engaged  in 
the  manufacture  of  boilers  in  1884.    The  price  of  boilers  was  high  enough 


« Ibid.,  p.  166. 


» Ibid.,  p.  51. 


3  Ibid.,  p.  166. 


»s*--  v 


24 


UNIVERSITY   OF  COLORADO  STUDIES 


FREIGHT  RATES  AND  MANUFACTURES  EST  COLORADO 


25 


to  encourage  their  manufacture  in  Colorado  if  the  railroads  would  have 
been  willing  to  change  their  classification  of  freight  so  as  not  to  discrimi- 
nate against  the  growth  of  the  manufacture.  Most  of  the  boilers  made  in 
Colorado  at  this  time  were  made  from  scrap  iron.'  If  the  freight  rate 
on  boiler  iron  had  been  reduced  to  75  cents  a  hundred,  it  was  said  before 
the  committee  that  the  boilers  made  in  Colorado  would  have  been  equal 
to  the  demand  in  that  state.  It  was  also  stated  that  this  lowering  of  the 
rate  on  boiler  iron  would  have  had  a  great  effect  in  developing  mining  in 
the  state.  In  1881-82  when  there  seemed  for  a  tim.e  to  be  a  prospect 
favoring  the  growth  of  this  industry,  the  Colorado  Iron  Works  employed 
from  150  to  300  men.* 

Mr.  James  W.  Nesmith,  the  president  of  the  Colorado  Iron  Works, 
testified  before  the  committee  in  verification  of  the  testimony  already 
given  by  other  witnesses  concerning  the  discrimination  against  the 
development  of  the  iron  industry  in  Colorado.  He  said  it  did  not  pay 
to  manufacture  boilers  in  Colorado  as  the  freight  on  boilers  was  at  that 
time  less  than  the  freight  on  the  iron  from  which  boilers  were  made  and 
this  iron  would  have  to  be  shipped  in  from  Pittsburgh.  Boilers  from 
the  same  point  could  be  brought  in  for  less  money.  To  make  the  boilers 
in  Colorado  would  have  cost  as  much  more  as  the  labor  put  into  the 
manufacture  of  them  was  worth.  Mr.  Nesmith  testified  that  this  discrim- 
ination had  always  existed.  There  was  a  rate  war  beginning  June  2, 
1884,  when  for  a  time  there  was  a  difference  of  twenty-five  cents  between 
the  freight  rates  on  raw  and  manufactured  iron.  The  Colorado  Iron 
Works  did  not  manufacture  more  than  S3  per  cent,  of  the  boilers  which 
they  might  manufacture  were  it  not  for  the  discriminating  freight  tariff. 
The  five  or  six  iron  manufacturing  concerns  in  Denver  in  1885  had  all 
dropped  out  of  the  business  of  making  boilers  on  account  of  the  unfavor- 
able freight  rate,  and  had  devoted  themselves  to  the  manufacture  of 
other  things.  At  that  time  $1,000,000  was  invested  in  the  various 
machine  shops  of  the  city,  all  of  which  could  engage  in  the  manufacture 
of  boilers  were  it  not  for  the  rate  against  them.  These  various  shops  had 
a  capacity  to  employ  1,200  men,  but  owing  to  the  unfavorable  attitude 
of  the  railroads  toward  the  development  of  manufactures  in  the  state, 


^ 


these  shops  were  not  then  and  had  not  been  for  a  year  employing  more 
than  150  men.  Had  there  been  no  rate  discrimination,  Colorado  would 
have  made  all  the  mining  machinery  needed  in  the  state.  However, 
at  that  time  and  with  all  the  shops  ready,  Denver  did  not  produce  more 
than  25  per  cent,  of  the  mining  machinery  needed  in  the  country  tribu- 
tary to  it.  It  was  stated  that  if  there  had  been  at  that  time  the  same 
discrimination  between  manufactured  articles  and  raw  iron  as  there  had 
been  between  pig  and  manufactured  iron,  the  iron  manufacture  would 
have  developed  rapidly  in  Denver.  The  rate  on  pig  iron  from  the  Missouri 
River  was  fifty  cents  a  hundred;  on  bar  iron  $1 .00.  If  the  bar  iron  was 
boxed  to  go  into  machinery,  the  rate  was  sixty  cents  a  hundred. '  There 
was  a  discrimination  also  against  Denver  as  a  distributing  point  for 
manufactured  articles.  The  rate  from  Denver  to  Wood  River  was  the 
same  as  the  rate  from  Omaha  and  other  Missouri  River  points  to  Wood 
River,  though  the  distance  was  several  times  as  great.* 

It  was  brought  out  in  the  testimony  before  the  committee  that  the 
Santa  Fe  charged  about  40  per  cent,  higher  rates  on  freight  from  Denver 
to  New  Mexico  points  than  was  charged  shippers  bringing  in  their  goods 
from  eastern  points.  As  an  illustration  of  this  Mr.  Davis,  a  manufacturer 
of  boilers  and  engines,  related  to  the  committee  the  following  incident: 
He  sold  a  hoisting  outfit,  boiler  and  engine,  to  a  person  who  desired  them 
to  be  shipped  to  Los  Cerillos,  New  Mexico.  After  the  bargain  had  been 
concluded,  other  dealers  in  boilers  and  engines  who  were  handling  goods 
shipped  in  from  the  East  offered  the  purchaser  of  Mr.  Davis'  machinery 
the  same  goods  at  a  cheaper  price.  The  purchaser  stuck  to  his  bargain. 
Mr.  Davis  went  to  see  about  the  freight  rate  on  the  outfit  to  the  destina- 
tion in  New  Mexico.  Before  stating  the  rate,  the  freight  agent  asked 
Mr.  Davis  where  the  goods  were  made.  When  he  was  told  they  were 
made  in  Denver,  the  freight  rate  announced  was  considerably  higher 
than  the  rate  from  Denver  to  New  Mexico  charged  commodities  that 
were  shipped  in  and  jobbed  from  Denver.  Mr.  Davis  next  tried  to  ship 
this  outfit  through  a  firm  that  had  a  special  agreement  with  the  Santa 
Fe,  Jensen,  Bliss  and  Company.  "  I  went  to  Mr.  Bliss  and  asked  him 
if  he  would  ship  it,  he  said  he  would  and  asked  what  it  was;  I  told  him 


«  Evidence,  Special  Railroad  CommiUee,  p.  169. 


'  Ibid.,  p.  168. 


*  Ibid.,  p.  4. 


Ibid. 


^ 


i 


26 


UNIVERSITY  OF  COLORADO  STUDIES 


FREIGHT  RATES  AND  MANUFACTURES  IN  COLORADO 


27 


I 


an  engine  and  boiler;  he  said,  1  can't  ship  that;  it  would  burst  my 
arrangements  up;'  he  said  he  had  a  special  contract  with  them  to  ship 
his  goods  at  a  special  rate  but  they  must  be  goods  shipped  in  here."^ 
This  transaction  occurred  some  time  previous  to  January,  1885.  Mr. 
Da\is  began  the  preparation  of  a  lawsuit  against  the  Santa  Fe  on  account 
of  this  discrimination  maintained  by  it,  but  found  that  at  that  time  there 
was  no  existing  law  against  it. 

Another  foundry  had  started  in  1880,  but  failed  as  the  rates  were 
so  high  that  coal,  coke  and  pig  iron  could  not  be  brought  in  to  enable 
the  manufacturer  to  compete  with  machinery  brought  in  from  the 

East.* 

Ini  883,  the  Union  Pacific  began  a  fight  against  the  Colorado  Coal 

and  Iron  Company  by  lowering  the  rates  on  manufactured  iron  goods. 

The  cut  began  in  Utah  and  by  September  11,  had  extended  to  Colorado. 

This  cut  affected  the  company  disastrously.^ 

The  same  situation  confronted  other  iron  industries  as  was  the  case 

with  the  boiler  manufacture.    In  a  new  country  that  was  doing  so  much 

development  work  as  was  being  done  in  Colorado  in  the  decade  from 
1880  to  1890,  much  iron  to  be  used  in  bridges  was  needed.  The  roads 
were  being  improved  in  all  directions  and  this  meant  a  great  need  of 
bridges.  Iron  had  been  found  to  be  the  best  material  of  which  bridges 
shoidd  be  made  and  it  was  therefore  natural  to  expect  the  development 
in  the  state  of  certain  bridge  manufacturing  plants.  This  did  not  occur 
as  the  rate  on  bridge  iron  brought  in  from  the  eastern  manufactories 
was  so  adjusted  that  the  eastern  manufacturer  could  make  the  bridges 
and  ship  them  to  the  Rocky  Mountain  region  more  cheaply  than  they 
could  be  made  in  Colorado.  As  late  as  1884,  no  iron  bridge  had  ever 
been  made  in  Colorado.  The  freight  on  the  raw  bridge  iron  from  the 
Missouri  River  was  $1 .00  per  hundred  weight,  while  the  freight  on  the 
finished  bridge  was  only  seventy-five  cents.  The  iron  manufacturers 
stated  that  twenty-five  cents  a  hundred  was  a  very  large  profit.^  It  is 
thus  very  clear  that  as  long  as  this  condition  prevailed,  bridges  would 
continue  to  be  made  east  of  the  Missouri  River  and  shipped  to  Colorado. 


»  Evidence,  Special  Railroad  Cammiitee,  p.  78. 
■  Ibid.,  p.  50. 


3  Ibid.,  p.  218. 

4  Ibid.,  p.  168. 


^k' 


.»  1 


< 


v> 


Powder 

Some  years  previous  to  1884,  a  company  was  formed  for  the  manu- 
facture of  powder  in  Denver.  Much  of  this  article  was  then  used  in 
the  mining  operations  in  the  districts  tributary  to  that  city  and  it  occurred 
to  the  men  promoting  the  company  that  the  cost  of  transporting  it  to 
Colorado  from  the  East  might  be  saved  if  its  manufacture  was  begun  in 
Denver.  The  company  secured  a  patent  by  which  it  was  claimed  that 
powder  could  be  made  for  nine  cents  a  pound  cheaper  than  it  was  then 
made  in  the  East.  The  mill  was  accordingly  started.  At  that  time  the 
price  of  powder  was  thirty-seven  or  thirty-eight  cents  a  pound.  Immedi- 
ately after  the  factory  was  in  operation,  the  price  was  put  down  to  twenty 
cents  a  pound  for  powder  brought  from  the  East  to  Denver.  It  cost 
more  than  twenty  cents  a  pound  to  manufacture  powder  at  the  Denver 
mill.  The  mill  was  operated  for  about  six  months  when  the  lower 
prices  of  powder  from  the  East  made  it  apparent  to  the  stockholders  that 
the  enterprise  was  not  likely  to  be  in  condition  to  pay  any  dividends  and 
the  mill  was  accordingly  closed.  The  stockholders  sold  out  for  about 
35  cents  on  the  dollar,  losing  about  $20,000  of  the  cost  of  the  plant. 

It  is  said  that  DuPont  did  not  want  the  mill  in  Denver  to  manufacture 
powder.  He  wanted  the  powder  to  be  made  in  his  mills  in  the  East. 
Mr.  Bosworth,  who  was  superintendent  of  the  mill,  told  the  conmiittee 
that  he  understood  there  was  a  rebate  given  by  the  railroad  companies 
as  powder  was  sold  in  Colorado  during  the  time  the  mill  was  in  operation 
for  less  than  it  could  be  made  in  the  East.^ 

Just  after  the  Denver  factory  had  started  and  when  the  price  had 
been  put  down,  the  president  of  the  company,  Henry  R.  Wolcott,  went 
East  to  investigate  the  low  price  of  powder.  He  found  that  powder 
making  in  the  East  was  in  the  hands  of  the  DuPont  monopoly,  and  that 
this  monopoly  in  combination  with  the  railroads  was  too  strong  for  the 
Denver  firm.  By  lowering  the  freight  rates  to  Colorado  and  also  the 
price  at  which  powder  was  sold  in  the  state,  and  by  recouping  itself  by 
higher  rates  and  prices  elsewhere,  the  combine  could  give  away  all  the 
powder  used  in  Colorado  and  still  not  lose.  When  this  state  of  afifairs  was 
understood,  it  was  felt  by  the  stockholders  that  it  was  idle  to  fight  the 

» Ibid.,  p.  66. 


.  ( 


28 


UNIVERSITY  OF  COLORADO  STUDIES 


^ 


I 


collusion  of  the  railroads  and  the  trust  and  although  the  Denver  plant 
was  one  of  the  finest,  it  was  sold  out  to  DuPont  at  his  own  figures.' 

Some  interesting  light  is  shed  on  this  matter  by  the  testimony  of  the 
general  freight  agent  of  the  Union  Pacific  Railroad.  This  agent,  Mr. 
Shelby,  stated  that  his  company  had  had  nothing  to  do  with  the  destruc- 
tion of  the  powder-mill.  His  railroad  wanted  to  go  out  of  the  business 
of  transporting  high  explosives  and  desired  to  foster  their  manufacture 
in  Colorado.  To  this  other  roads  having  terminals  in  Colorado  objected 
and  believed  that  their  interests  lay  in  the  transportation  of  powder  to 
Colorado.  The  Union  Pacific  went  out  of  the  business  of  transporting 
powder  for  a  time  and  the  other  roads  charged  a  high  tarifiF  for  carrying 
it.  Mr.  Shelby  did  not  think  the  rate  was  lowered  for  the  purpose  of 
destroying  the  powder  factory  in  Denver.  He  thought  the  case  was 
more  like  the  case  of  the  soap  factory  mentioned  above.  Kirk  wanted 
to  monopolize  the  manufacture  of  soap  and  did  so.  So  with  the  DuPont 
powder  company;  they  would  give  away  powder  in  Colorado  rather  than 
let  the  factory  produce  it  in  the  state.* 

Glass 

The  glass  industry  encountered  similar  opposition  to  that  which 
confronted  the  others  already  described.  It  is  an  industry  that  tends 
to  establish  itself  as  near  as  may  be  to  the  localities  where  it  is  consumed 
in  large  quantities  as  the  commodity  is  one  that  is  liable  to  loss  from 
breakage  resulting  from  shipment.  Thus  with  the  growth  of  Denver 
and  the  cities  of  Colorado,  there  was  an  impetus  given  to  the  establish- 
ment of  glass  industries.  According  to  statements  by  the  Denver  dealers, 
during  the  ten  months  ending  November  i,  1881,  $281,000  worth  of 
glass  was  sold  in  Denver.  Mr.  Burdsall  came  to  the  conclusion  that 
this  manufacture  might  be  carried  on  profitably  there  as  all  the  materials 
needed  in  making  it  were  to  be  found  in  Colorado  and  not  distant  from 
the  city.  He  intended  to  utilize  the  soda  lakes  near  Morrison  from  which 
an  abundance  of  soda  could  be  easily  brought  to  Denver.  He  discussed 
the  matter  with  the  Union  Pacific  ofl&cials  and  found  that  the  freight  on 
the  incoming  glass  was  a  considerable  item  in  the  income  of  that  railroad, 

»  Evidence,  Special  Railroad  Committee,  p.  64.  *  Ibid.,  p.  343. 


FREIGHT  RATES  AND  MANUFACTURES  IN  COLORADO 


29 


.f 


amounting  to  not  less  than  $100,000  for  the  preceding  ten  months.  Mr. 
Burdsall  also  discussed  with  the  railroad  officials  the  matter  of  bringing 
in  soda  from  Morrison  and  establishing  a  glass  factory  in  Denver;  they 
told  him  that  if  his  company  started  a  factory  in  Denver,  they  would  put 
the  freight  rate  on  glass  from  the  East  down  to  nothing  so  as  to  kill  his 
company's  business.^  They  charged  Mr.  Burdsall  $14  a  car  to  ship 
some  soda,  silica,  kaolin  and  so  forth  from  Morrison  to  Denver.  Lime 
and  other  products  for  the  Grant  Smelter  were  brought  to  Denver  from 
the  same  place  for  seven  dollars  a  car.  The  materials  near  Morrison 
were  so  abundant  that  if  the  rate  from  there  to  Denver  could  be  lowered, 
glass  and  sulphate  of  soda  could  be  made  in  Denver  and  sold  in  the 
country  tributary  to  that  city  in  defiance  of  anything  the  railroads  could 
do.  At  the  prevailing  rate  east,  the  product  might  be  shipped  to  the 
Missouri  River  and  sold  there.* 

The  general  freight  agent  of  the  Union  Pacific,  Mr.  Shelby,  told  the 
committee  that  the  rates  on  silica,  soda  etc.  were  not  fourteen  dollars 
a  car  if  several  cars  a  day  were  shipped.  He  said  lower  rates  were  not 
given  the  Grant  Smelter.^  The  explanation  would  seem  to  be  that  the 
Grant  Smelter  was  at  that  time  consuming  enough  of  the  material  to 
get  a  cheaper  rate  in  consequence  of  larger  shipments.  Mr.  Shelby 
also  stated  that  at  that  time  the  Union  Pacific  would  be  glad  to  encourage 
a  glass  factory  in  Denver  and  would  haul  in  the  materials  at  as  low  a 
rate  as  four  cents  a  hundred  as  it  was  then  (1885)  doing  for  the  glass 
factory  that  had  recently  started.^ 

Mr.  John  P.  Epley  began  the  manufacture  of  glass  in  Denver  in  1884. 
His  factory  turned  out  bottles  only.  These  he  attempted  to  sell  in  the 
territory  tributary  to  Denver,  but  had  encountered  difficulties.  He 
received  an  order  for  bottles  to  be  shipped  to  a  point  east  of  Denver  on 
the  Burlington,  but  as  soon  as  the  customer  ascertained  what  the  freight 
would  be,  he  canceled  the  order.  The  freight  rate  for  bottles  made  in 
Denver  and  shipped  to  points  in  the  territory  adjacent  was  too  high  to 
allow  such  manufacture  to  develop.  After  the  factory  had  been  started, 
the  freight  rates  on  bottles  from  the  East  were  lowered.    In  consequence, 


'  Ibid.,  p.  147- 
» Ibid.,  p.  149- 


3  Ibid.,  p.  248. 
*Ibid. 


i 


30 


UNIVERSITY  OF  COLORADO  STUDIES 


the  price  of  the  bottles  made  in  Denver  had  to  be  lowered  to  meet  the 
competition  and  hold  the  customers  which  the  new  factory  had  secured 
in  Denver.  None  of  the  materials  used  in  the  manufacture  of  bottles 
by  this  factory  were  brought  in  from  the  East.  The  soda  was  brought 
from  Wyoming.  When  this  glass  company  attempted  to  extend  its 
trade  to  the  southern  part  of  Colorado,  territory  served  by  the  Santa  Fe 
railroad,  it  encountered  difficulties  as  the  freight  rate  from  Denver  to 
the  points  in  this  territory  had  been  raised  during  the  year  1884  and  just 
after  the  glass  factory  had  started.  ^ 

Carriages 

The  difficulties  which  the  manufacturer  of  carriages  suffered  on 
account  of  the  arrangement  of  the  freight  rates  were  related  to  the  inves- 
tigating committee  of  the  legislature  by  Mr.  D.  K.  Wall,  a  carriage 
manufacturer  who  was  employing  from  fifteen  to  twenty-five  men  in 
his  factory  in  1885.  Mr.  Wall  stated  that  the  freight  rate  on  carriages 
partly  finished  in  the  white  as  it  is  called  was  the  same  as  the  rate  on  the 
finished  product.  Carriages  made  in  Colorado  were  said  by  this  manu- 
facturer to  be  superior  to  those  made  in  the  East  owing  to  the  greater 
dryness  of  the  atmosphere  and  the  fact  that  the  timber  would  in  conse- 
quence be  so  much  better  seasoned.  Mr.  Wall  thought  carriage  manu- 
facture could  be  carried  on  as  well  in  Denver  as  anywhere  as  it  is  the 
custom  for  all  carriage  manufactories  to  have  certain  parts  used  in  the 
manufacture  shipped  in  from  points  all  over  the  United  States.  The 
rate  on  carriages  from  the  Missouri  River  at  that  time  was  $1.37^  a 
hundred  weight,  the  same  as  the  rate  on  carriage  wheels  in  the  white 
or  other  parts  of  the  vehicle.  He  stated  that  if  rates  were  proportioned 
according  to  the  value  of  the  article,  carriages  would  be  made  in  Denver 
at  a  very  good  profit.  Many  laborers  had  come  out  to  Colorado  for 
their  health  and  unable  to  do  heavy  work  would  be  very  happy  to  find 
work  such  as  is  required  in  a  carriage  factory  and  which  they  would  be 
able  to  perform  successfully.* 

Another  carriage  manufacturer  employing  from  fifteen  to  twenty- 
five  men  confirmed  the  testimony  of  Mr.  Wall,  stating  that  everything  that 


«  Evidence,  Special  Railroad  Committee,  p.  55. 


•  Ibid.,  p.  157. 


FREIGHT  RATES  AND  MANUFACTURES  IN  COLORADO 


31 


goes  into  a  carriage  is  charged  at  a  higher  freight  rate  than  the  finished 
carriage  when  that  is  shipped  from  the  East.  This  manufacturer,  Mr. 
Melburn,  stated  that  in  1883  he  had  asked  that  the  rates  on  all  the  things 
that  go  to  make  a  wagon,  wheels,  springs,  carriage  bolts  etc.  be  so  ad- 
justed that  they  would  be  the  same  as  the  rate  on  manufactured  wagons. 
This  the  railroad  officials  refused  and  said  the  articles  could  be  classi- 
fied only  after  their  arrival  here.  The  rates  were  such  that  the  freight 
on  a  car  of  finished  wagons  from  the  Missouri  River  to  Denver  would 
cost  $200,  but  the  car  of  parts  of  wagons  from  the  Missouri  River  would 
have  to  pay  freight  amounting  to  $365.  The  manufacturer  stated  that 
four  carriage  wheels  in  raw  material  ironed  cost  $17 .  40,  but  when  painted 
and  ready  for  the  wagon  they  were  worth  $32,  the  difference  being 
due  to  the  additional  labor  put  on  them.  If  the  freight  on  this  $17.40 
of  raw  material  were  in  the  same  proportion  to  the  value  of  the  material 
as  the  freight  on  the  manufactured  article  was  to  its  value,  carriages 
could  be  made  in  Denver  and  the  Denver  manufacturers  would  control 
the  trade.  Their  profits  would  be  increased  about  10  per  cent.,  said 
Mr.  Melburn.  It  seems  that  at  that  time  the  carriages  made  in  Colorado 
would  sell  for  a  little  more  than  those  shipped  from  the  East.' 

An  interesting  light  is  thrown  on  the  carriage  trade  by  the  testimony 
of  this  manufacturer.  It  seems  that  when  he  began  the  manufacture 
of  wagons  in  1877,  vehicles  made  in  Colorado  were  not  in  demand,  but 
by  1884  the  preference  was  given  to  the  wagons  that  were  made  in  the 
state.  It  was  estimated  at  that  time  that  the  wagons  made  in  the  state 
would  last  20  per  cent,  longer  because  of  the  better  seasoning  of  the 
timber  put  into  them,  due,  of  course,  to  the  dryness  of  the  climate.  A 
lowering  of  the  rates  would  enable  him  to  employ  in  his  factory  300  more 
hands.  At  that  time  not  more  than  125  men  were  employed  in  this  kind 
of  manufacture  in  the  entire  city.  The  witness  stated  that  the  employ- 
ment of  300  more  men  would  mean  a  difference  in  the  population  of  the 
city  of  from  1,500  to  2,000.* 

Building  Material  and  Furniture 

The  freight  rates  had  their  effect  on  the  manufacture  of  the  higher 
grades  of  building  material  and  furniture.      Sash,  doors  and  blinds 


^Ibid. 


•  Ibid.,  p.  157. 


32 


UNIVERSITY   OF  COLORADO  STUDIES 


FREIGHT  RATES  AND  MANUFACTURES  IN  COLORADO 


33 


I 


i 


made  in  Denver  could  not  be  marketed  north  of  the  Union  Pacific  nor 
south  of  the  Santa  Fe.  One  of  the  prominent  lumber  dealers  in  Denver 
stated  that  in  1882  he  could  make  doors  and  started  in  the  business  but 
the  Chicago  firms  got  the  rates  lowered  so  that  in  1885,  doors  could  not 
be  made  in  Colorado.  In  1885,  the  rate  on  glazed  sash  from  the  Missouri 
River  to  Colorado  common  points  was  seventy-five  cents;  on  window  glass 
the  freight  rate  from  the  River  was  one  dollar.  Therefore  glazing  could 
not  well  be  done  in  Denver.  At  that  time  only  odd  sizes  of  sash  and  the 
like  were  made  in  the  city.  These  sizes  did  not  compete  with  the  product 
shipped  in  from  the  East  and  the  manufacturer  was  therefore  allowed 
to  sell  them  north  of  the  Union  Pacific  railroad.  His  market  could  not 
be  extended  to  the  towns  within  a  short  distance  of  Denver  such  as  Long- 
mont,  Colorado  Springs  or  Pueblo.  The  freight  rate  on  such  goods 
from  the  East  to  these  points  was  the  same  as  the  rate  from  Denver.' 

Mr.  Henry  C.  Taussig,  a  manufacturer  of  packing-boxes,  stated  that 
the  freight  rate  on  such  boxes  complete  in  the  knock-down  shape  from 
the  Missouri  River  to  Colorado  points  was  the  same  as  the  rate  on  the 
rough  lumber  of  which  such  boxes  were  made.  There  was  also  consid- 
erable waste  in  the  manufacture  of  these  boxes.  Mr.  Taussig  stated 
that  this  rate  was  special  to  certain  dealers  in  the  city.  Some  makers 
of  crackers  and  soap  were  getting  their  boxes  from  the  East  in  1885. 
The  rate  had  not  recently  been  lowered,  but  the  classification  of  packing- 
boxes  had  been  changed.  He  could  not  sell  to  the  soap  factory  in  Pueblo 
as  the  rate  from  Kansas  City  to  Pueblo  was  the  same  as  the  rate  from 
Kansas  City  to  Denver.  The  rate  on  lumber  from  the  mountains  of 
Colorado  about  75  miles  distant  was  $1.65  a  hundred  weight,  while 
the  rate  on  lumber  from  Kansas  City,  600  miles,  was  fifty  cents.  =" 

A  broom  factory  was  started  in  Denver  in  1880.  The  market  was 
mostly  local  owing  to  the  imfavorable  freight  rates  from  the  East  as 
compared  with  the  rates  from  the  Denver  manufactory.  Brooms  were 
shipped  from  various  points  between  the  Missouri  River  and  Denver 
to  points  in  the  Mountains  at  $40  a  car.  The  rate  on  brooms  shipped 
from  the  Denver  factory  to  the  same  points  in  the  Mountains  was  $130  to 
$150  a  car.     Manufactured  brooms  were  also  shipped  from  the  Missouri 


'  ^ 


*i^- 


>"♦ 


River  to  Denver  at  the  same  rate  as  raw  material.  Brooms  were  classi- 
fied as  wooden  and  willow  ware,  the  same  as  raw  material.  It  cost  more 
at  that  time  to  ship  a  carload  of  broom  handles  from  the  River  to  Denver 
than  it  cost  to  ship  a  carload  of  brooms.'  Mr.  Shelby,  freight  agent  of 
the  Union  Pacific,  said  that  these  rates  would  be  modified  so  as  to  give 
the  Denver  broom  manufacturer  a  market  from  100  to  200  miles  east  of 
the  city.^ 

A  furniture  dealer  who  had  also  been  engaged  in  the  manufacture  of 
mattresses  stated  that  he  had  had  to  abandon  their  manufacture  on 
account  of  the  unfavorable  freight  rate  on  goods  brought  in  from  the 
East.  Rates  on  materials  from  which  mattresses  are  made  were  $1 .  05 
from  the  Missouri  River  to  Colorado.  After  the  manufacture  had 
begun  in  Denver,  the  rate  on  these  materials  was  advanced  to  $1.45. 
Then  the  firm  ceased  to  manufacture  and  bought  the  mattresses  in  the 
East.  Mr.  Gartner,  the  manufacturer,  stated  that  the  rates  on  the  raw 
material  for  upholstered  goods  were  the  same  as  for  the  finished  article. 
Mr.  Stewart,  another  manufacturer  of  mattresses,  confirmed  what  Mr. 
Gartner  had  said  and  added  other  interesting  items.  He  had  begun 
the  manufacture  of  mattresses  in  1881  and  soon  found  that  the  freight 
rates  were  unfavorable  to  the  extension  of  his  market  over  territory 
south  of  Denver.  Freight  rates  to  New  Mexican  points  had  been  raised 
after  the  factory  started.  Formerly  the  rate  on  mattresses  from  Denver 
to  Las  Vegas  was  $1.55;  in  1885,  it  was  $2 .  80.  The  old  rate  to  Albu- 
querque was  $2.15;  in  1885,  it  was  $3 .  80.  Until  1884  or  1885,  the  rates 
from  Denver  to  points  in  New  Mexico  were  higher  than  the  rates  from 
the  Missouri  River  to  these  points.  This,  of  course,  did  not  encourage 
the  growth  of  his  market.  The  freight  rate  on  bed  springs  was  lower 
than   the  rate  on   the  raw  wire  of  which  these  bed   springs  were 

made.^ 

The  freight  rate  on  chairs  in  knock-down  condition  was  the  same 
as  the  rate  on  chairs  set  up  and  finished  if  shipped  in  carload  lots.  Look- 
ing glass  plates  were  charged  the  same  freight  rate  as  finished  looking 
glasses,  and  all  furniture,  whether  in  the  raw  or  finished  condition,  paid 


»  Evidence,  Special  Railroad  ComtniUee,  pp.  73,  79.  81. 


» Ihid.,  p.  33. 


» Ihid.,  p.  39. 
» Ibid.,  p.  8s. 


» Ibid.,  p.  28. 


» 


/ 


34 


UNIVERSITY  OF  COLORADO  STUDIES 


the  same  rate.^  Labor  was  higher  in  Colorado  and  without  a  consider- 
able difference  in  the  raw  and  manufactured  goods,  furniture  could  not 
be  finished  in  Denver.^ 

Cement  and  Terra  Cotta 

Fire  brick,  cement  and  terra  cotta  works  in  Denver  had  each  similar 
experiences  to  those  of  the  other  industries  already  mentioned.  The 
fire  brick  company  could  not  enlarge  its  market  on  account  of  the  unfa- 
vorable freight  rates.  The  cost  of  manufacturing  this  commodity  in 
Denver  was  somewhat  higher  than  at  the  Missouri  River  points  as  the 
coal  had  to  be  hauled  in  and  labor  was  higher.  After  the  article  was 
manufactured,  however,  the  rates  from  Denver  to  points  in  Idaho  and 
Montana  were  the  same  as  the  rate  to  those  points  from  places  on  the 
Missouri  River.^  This  condition  confined  the  fire  brick  made  in  Denver 
to  the  local  market. 

Much  the  same  condition  confronted  the  manufacturers  of  cement 
in  Denver  in  the  years  preceding  1885.  The  firm  could  not  sell  its 
product  in  Salt  Lake  as  the  rate  from  Denver  to  Salt  Lake  was  about 
the  same  as  the  rate  from  the  Missouri  River  to  Salt  Lake  and  hence, 
the  manufacturer  at  the  River  who  could  produce  more  cheaply  had 
the  advantage  over  the  Denver  manufacturer.  The  freight  rate  from 
Denver  to  Albuquerque  was  the  same  as  the  rate  from  the  Missouri 
River  to  the  same  point.  This  was  true  generally  of  the  rates  to  points 
in  Mexico.  In  1885,  the  freight  rate  on  cement  from  Denver  to  Chey- 
enne was  lower  than  the  rate  from  the  River  to  that  point  but  the  Denver 
company  could  not  sell  cement  in  Cheyenne.  Mr.  Evans,  the  secretary 
of  the  company,  stated  that  he  thought  the  merchants  in  Cheyenne  were 
getting  rel  ates  at  that  time,  and  that  the  public  schedule  did  not  obtain. 
He  said  his  company  had  nearly  closed  a  contract  for  three  cars  in  that 
city,  but  the  Union  Pacific  learned  of  it  and  cut  the  freight  rate  so  that 
the  company  lost  the  contract  and  the  cement  was  hauled  from  the  Mis- 
souri River.  After  the  factory  had  been  started  in  Denver,  the  freight 
rate  on  cement  from  the  Missouri  River  to  Denver  was  greatiy  lowered, 
whether  to  injure  the  factory  or  not  the  secretary  said  he  did  not  know.^ 

The  terra  cotta  stone  works  were  built  in  1881  and  the  product  was 

«  Evidence,  Special  Railroad  Committee,  p.  91.  '  Ibid.,  p.  142.  *  Ibid.,  p.  35.        *  Ibid.,  p.  4a. 


J 


^- 


f 


< 


.f> 


FREIGHT  RATES  AND  MANUFACTURES  IN  COLORADO 


35 


soon  more  than  sufficient  to  supply  the  local  market.  The  owner,  Mr. 
Moulton,  sought  to  sell  his  surplus  in  Salt  Lake.  He  found  to  his 
astonishment  that  the  freight  rate  on  a  car  of  his  products  from  Denver 
to  Salt  Lake  was  $75  more  than  the  rate  on  the  same  products  from  the 
Missouri  River  to  Salt  Lake.  Eastern  firms  at  Akron,  Ohio,  Peoria, 
111.,  and  Des  Moines,  Iowa,  were  then  competing  in  the  Denver  market. 
Since  Mr.  Moulton's  factory  was  started,  the  freight  rate  from  the 
Missouri  River  to  Denver  had  been  greatly  lowered.  He  stated  that 
if  the  rates  had  remained  the  same  as  they  were  when  his  factory  began 
operations,  he  would  be  able  to  compete  with  eastern  manufacturers. 
The  rate  then  existing  on  terra  cotta  products  from  Denver  to  Salt 
Lake  was  $250  a  car.  The  rate  from  Omaha  to  Salt  Lake  on  the  same 
products  was  $175  a  car.  This  effectually  shut  out  Denver  from  the 
market  in  Salt  Lak  .  Seventy-five  dollars  a  car  was  a  handsome  profit 
according  to  the  testimony  of  the  Denver  manufacturer.' 

Groceries 

The  grocery  business  was  so  discriminated  against  by  the  freight 
rate  that  Denver  could  not  become  a  distributing  point  for  the  Rocky 
Mountain  country.  It  was  stated  in  the  evidence  before  the  railroad 
committee,  that  the  Kansas  Pacific  Railroad  was  capitalized  at  $250,000 
a  mile  which  sum  was  vastly  beyond  the  cost  of  constructing  it,  and  that 
in  consequence  of  this  great  capitalization,  it  was  the  desire  of  the  rail- 
road company  to  secure  all  the  returns  in  freight  that  could  possibly 
be  obtained.  The  same  was  more  or  less  true  of  the  capitalization  of 
the  other  railroads  that  at  that  time  terminated  in  Denver  or  other  parts 
of  the  state.  It  was  alleged  that  the  railroads  expected  the  people  to 
pay  interest  on  this  enormous  capitalization,  and  hence  the  high  r  tes 
for  everything  carried  into  the  state.  Mr.  Shelby,  general  freight  agent 
of  the  Union  Pacific,  stated  that  during  the  preceding  year,  the  Union 
Pacific  fell  short  of  paying  expenses  and  interest  on  bonds  by  $623,299.* 
It  was  also  charged  by  Mr.  Martin,  a  wholesale  grocer,  that  the  goods 
shipped  to  Colorado  were  frequently  overweighed.  He  had  brought 
a  suit  against  the  railroad  company  on  this  charge  and  had  won  the  suit.^ 


» Ibid.,  p.  171. 


•  Ibid.,  p.  240. 


3  Ibid.,  p.  61. 


f  11 


i 


^5  UNIVERSITY  OF  COLORADO  STUDIES 

The  following  table  of  freight  rates  on  the  various  groceries  shows 
very  clearly  the  discrimination  in  that  business:* 

CANNED  GOODS 

California  to  Boston $i  •  25 

California  to  Cheyenne i  •  20 

California  to  Atchison 125 

California  to  Denver i  •  7© 

DRIED  FRUITS 

California  to  Chicago i  85 

California  to  Denver 2.60 

RAISINS 

California  to  Missouri  River i  50 

California  to  Denver 2.50 

NUTS 

California  to  Chicago 180 

California  to  Denver 2.50 

BEANS 

California  to  Chicago i-5o 

California  to  St.  Louis i -So 

California  to  Cincinnati i -S^ 

California  to  Denver i-7o 

COFFEE  AND  RICE 

California  to  Missouri  River i  •  16 

CaUfomia  to  Denver i  •  7© 

FRUITS  AND  VEGETABLES   (CAR  LOTS) 

California  to  Chicago 1-25 

California  to  Denver 1-75 

California  to  Denver  (less  car  lots) 3So 

SUGAR 

California  to  Kansas  City i.oo 

California  to  Denver i  •  4© 

RICE 

CaUfomia  to  Kansas  City 100 

California  to  Denver ^  •  4© 

By  this  table  it  appears  that  all  staple  groceries  that  came  from  Cali- 
fornia to  Denver  were  charged  at  a  higher  rate  of  freight  than  if  they 

* 
«  Evidence,  Special  Railroad  CommiUee,  p.  60. 


FREIGHT  RATES  AND  MANUFACTURES  IN  COLORADO 


37 


f 


went  on  through  to  the  Missouri  River  or  Chicago.    As  a  general  rule, 
all  fifth  class  goods  which  consisted  of  groceries  were  hauled  from  Cali- 
fornia to  the  Missouri  River  points  for  one  dollar,  but  to  Denver,  six 
hundred  miles  shorter  haul,  the  rate  was  $1.50.     Green  fruits  shipped 
from  California  to  Denver  paid  a  rate  of  two  cents  a  pound,  but  if  shipped 
through  to  the  Missouri  River,  New  York  or  Chicago,  th^  rate  was  one 
cent  a  pound.'     A  number  of  wholesale  grocers  confirmed  this  testi- 
mony.^   Isaac  Brinker,  a  retired  grocer,  bought  syrup  in  California 
and  shipped  it  to  the  Missouri  River  and  then  back  from  the  River  to 
Denver  in  order  to  get  the  advantage  of  the  lower  freight  rate.^     Mr. 
Wolfe  Londoner,  one  of  the  wholesalers  of  Denver,  stated  that  the  rail- 
road pool  was  a  great  injury  to  the  business  interests  of  the  city.    The 
rates  were  so  arranged  as  to  favor  shipping  in  manufactured  goods. 
He  had  lost  his  trade  at  Trinidad,  Colorado  Springs  and  Grand  Junction, 
on  account  of  the  discrimination  against  Denver  as  a  distributing  point. 
The  freight  rate  from  Chicago  to  Salt  Lake  injured  the  trade  of  the  Den- 
ver wholesalers  and  destroyed  the  trade  with  Grand  Junction.     It  was 
hard  for  the  wholesalers  to  live  at  that  time  as  the  rates  were  so  unfavor- 
able.   Merchants  in  Georgetown  and  other  points  in  the  interior  of  the 
state  could  get  the  same  rate  as  the  Denver  wholesaler  and  as  a  conse- 
quence, they  ceased  buying  from  the  Denver  house  and  bought  directly 
from  the  firms  in  the  East  or  elsewhere.^    It  was  impossible  to  ship 
groceries  to  Utah  from  Colorado.     California  competed  with  the  East. 
Canned  goods,  coffee,  rice,  dried  fruit,  liquors,  cigars,  machinery  and  nails 
were  hauled  from  California  to  Utah  because  these  all  came  to  Cali- 
fornia by  water  and  at  a  very  low  rates.    They  had  been  shipped  from 
California  to  points  in  Utah  at  as  low  as  thirty-five  cents  a  hundred 
weight.    This  is  why  the  freight  rate  on  nails  from  Pittsburgh  to  Cali- 
fornia was.  sixty-five  cents  a  hundred. s 

In  explaining  why  fifth  class  freight  was  carried  from  California 
to  Chicago  and  Omaha  more  cheaply  than  to  Denver,  Mr.  Shelby, 
general  freight  agent  of  the  Union  Pacific,  said  that  there  was  water 

« Ibid.,  p.  243.    Mr.  Shelby,  general  freight  agent  of  the  Union  Pacific,  said  this  was  not  true  in  1885. 
•  Ihid.,  pp.  133,  97.  "  ^^^"  PP-  ^39,  140. 

3/6«i..p.  III.  s/Wrf.,p.  199. 


.^ 


i'^HMI 


38 


UNIVERSITY  OF  COLORADO  STUDIES 


competition  at  these  points  and  there  was  no  water  competition  at 
Denver.    These  articles  were  shipped  around  Cape  Horn.^ 

Coal  Mining 

It  appears  also  that  the  business  of  coal  mining  upon  which  the 
growth  of  manufacturing  industry  depends  was  not  greatly  encouraged 
by  the  railroads.  Various  witnesses  before  the  committee  testified  to 
discriminations  of  difiFerent  kinds  which  interfered  with  the  profitable 
conduct  of  the  business.  Mr.  Langford  who  was  at  that  time  operating 
the  Marshall  Mine  about  sixteen  miles  from  Denver  stated  that  the 
freight  rate  on  coal  from  the  mine  to  Denver  was  $1.25  a  ton.  The 
Louisville  Mine  was  operated  by  the  Union  Coal  Company  and  was 
two  miles  farther  from  Denver  than  the  Marshall  Mine,  but  the  rate  on 
coal  from  the  Louisville  Mine  to  Denver  was  only  twenty -five  cents  a 
ton.  This  was  denied  by  the  general  freight  agent  of  the  Union  Pacific 
who  said  the  Union  Coal  Company  was  a  department  of  the  Union  Pacific 
Railroad.*  The  directors  and  stockholders  of  the  Louisville  Mine  were 
the  same  as  the  largest  stockholders  in  the  Union  Pacific  Railroad 
Company.^  Mr.  Goodrich  who  was  mining  coal  at  Erie  confirmed  the 
testimony  of  Mr.  Langford.  He  stated  that  he  was  obliged  to  pay  $1 .  00  a 
ton  to  get  his  coal  from  Erie  to  Denver,  and  that  he  could  not  sell  in  the 
Mountains  nor  south  of  Denver  as  the  freight  rate  was  discriminatory.^ 

The  sale  of  Colorado  coal  outside  of  the  state  was  not  encouraged  by 
the  railroads.  A  Denver  dealer  got  orders  for  coal  at  places  in 
Kansas.  The  Union  Pacific  quoted  him  a  rate  of  $3.50  a  ton  for 
the  shipment  of  coal  to  these  points.  A  traveler  had  been  sent  out  and 
had  worked  up  considerable  trade.  Three  cars  were  sent  over  the  Union 
Pacific.  Then  an  order  came  to  receive  no  more  cars,  and  the  shipper 
had  to  abandon  the  attempt  to  sell  in  Kansas.  Coal  was  at  that  time 
being  mined  in  Gunnison  County  and  shipped  to  Denver  ready  for  the 
markets  in  Kansas  and  Nebraska.  The  coal  came  over  the  Rio  Grande. 
The  Union  Pacific  raised  the  freight  rate  for  hauling  coal  to  points  in 
the  states  east  of  Colorado  to  $10.00  a  ton.    The  officials  of  the  Union 


FREIGHT  RATES   AND  MANUFACTURES   IN   COLORADO 


39 


Pacific  said  they  were  not  receiving  any  freight  from  the  Rio  Grande  at 
that  time.  A  similar  case  happened  with  the  Santa  Fe.  As  soon  as  it 
was  learned  that  the  coal  came  from  Colorado,  a  prohibitory  tariff 

was  fixed.  ^ 

It  is  stated  in  the  report  of  the  railroad  commissioner  for  the  year 
1885  that  the  price  of  coal  was  exhorbitantly  high  to  the  consumers  in 
many  parts  of  the  state.  This  was  due  to  the  large  profits  secured  by 
the  dealers  and  not  to  any  extreme  cost  of  production.  It  appeared  that 
the  dealers  in  many  instances  had  been  able  to  secure  a  monopoly  of 
the  business  through  connivance  with  the  railroad  companies.  Dis- 
crimination had,  therefore,  become  so  common  that  it  became  a  settled 
conviction  in  the  public  mind  that  a  coal  measure  in  the  state  was  without 
value  unless  owned  by  or  in  connection  with  a  railroad  company,  and  that 
the  transportation  companies  controlled  the  price  of  the  entire  product. 
Whether  or  not  this  was  true,  the  report  does  not  say." 

The  explanation  of  the  railroads  being  engaged  in  the  business  of 
coal  mining  is,  however,  not  without  great  interest  because  of  the  light 
it  throws  on  the  development  of  manufactures  in  the  state.     When 
the  railroads  reached  Colorado  in  the  summer  and  fall  of  1870,  a  demand 
for  coal  was  created.    The  consumption  by  the  railroads  was  more  than 
the  mines  could  produce  with  their  equipment  at  that  time.    Hence, 
the  era  of  railroads  created  a  demand  for  the  investment  of  more  capital 
in  the  coal  mining  business.    This  capital  was  not  furnished  by  private 
parties  as  their  wealth  was  invested  in  the  mining  of  precious  metals. 
The  Colorado  immigrant  of  the  earlier  decade  came  for  the  purpose  of 
mining  gold  and  not  coal.    His  relation  to  the  coal  mining  industry  was 
that  of  consumer  rather  than  producer.     If  the  railroads  had  not  engaged 
at  that  time  in  the  mining  of  coal,  it  is  quite  possible  that  their  excessive 
demands  on  the  small  amount  of  private  capital  invested  in  the  business 
would  have  added  a  scarcity  value  to  the  product.     It  was  on  this  account 
that  the  railroad  ownership  and  operation  of  coal  mines  was  not  in  the 
earlier  decades  considered  a  serious  menace  to  the  welfare  of  the  state.^ 
The  commissioner  of  railroads  stated  that  as  private  enterprise  entered 


»  Evidence,  Special  Railroad  Committee,  p.  248. 
»  Ibid.,  p.  339. 


3  Ibid.,  p.  so. 
*  Ibid.,  p.  64. 


»  Ibid.,  pp.  104,  105. 

•  Report  of  tJie  Railroad  Commissioner,  pp.  63,  65,  1885. 


*  Ibid.,  p.  66,  1885. 


40 


XJNIVERSITY  OF  COLORADO  STUDIES 


the  field,  the  railway  manager  could  not  fail  to  see  that  the  interest  of 
his  company  would  not  be  advanced  by  his  staying  in  the  markets  as 
a  commercial  trader  and  antagonizing  the  patrons  of  his  road.'  The 
difficulty  with  the  situation  in  1885  was  the  monopoly  of  the  business 
by  the  railroads  and  their  affiliated  dealers  so  that  private  capital  was 
discouraged  from  going  into  the  business.  As  a  result  of  this  situation, 
the  high  price  of  this  most  essential  commodity  had  a  depressing  effect 
on  the  minds  of  those  persons  who  were  considering  the  establishment 
of  new  manufacturing  plants  in  the  state. 

»  Report  of  ike  Railroad  Commissioner,  p.  66,  1885. 


I  ■'■ 


« 


Chapter  III.    Testimony  of  Railroad  Officials 

The  true  attitude  of  the  railroads  toward  the  growth  of  manufacture 
in  Colorado  during  this  period  is  perhaps  most  clearly  shown  by  the 
statements  of  the  freight  agents  before  the  investigating  committee  of 
1885.  The  freight  agent  of  the  Santa  Fe  testified  that  the  rate  on 
freight  from  Denver  to  points  in  New  Mexico  was  uniformly  more  than 
the  rate  from  Kansas  City.  He  said  it  averaged  40  per  cent,  more  on 
goods  made  in  Colorado.  The  rate  was  uniformly  more  to  Denver  and 
from  there  to  destination  than  was  the  case  if  the  freight  went  through 
direct.  The  then  existing  rates  were  not  published  in  the  rate  sheet, 
but  were  gotten  up  in  a  hektograph  form  and  distributed  among  some 
of  the  shippers.  The  date  of  the  sheet  exhibited  to  the  committee 
was  January  i,  1882.  It  showed  a  pronounced  discrimination  against 
Colorado  manfacturers.  These  rates  applied  on  jobbing  business.' 
They  were  as  follows: 

DISCRIMINATION  AGAINST  COLORADO  MANUFACTURERS 

Furniture  made  in  the  East  I 

"  "      "  Colorado 

Fourth  class  goods  made  in  the  East 
"         "        "        "      "  Colorado 
First  class  goods  made  in  the  East 
"       "        "         "      "  Colorado 
Fourth  class  goods  made  in  the  East 
"         "        "        "      "  Colorado 
First  class  goods  made  in  the  East 
"       "        "         "      "  Colorado 
Fourth  class  goods  made  in  the  East 
"  "        "         "      "  Colorado 

Iron  made  in  the  East 

"       "      ^'  Colorado 
Nails  made  in  the  East  (car  lots) 

"        "      "  Colorado 

>  Evidence,  Special  Railroad  Committee,  pp.  io6,  107. 

41 


ebk 

)  to  Albuquerque 

^1^1.40 

(( 

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2.15 

a 

U                            It 

115 

Cl 

li              it 

1.47 

it 

"  Socorro 

1.6s 

(( 

U                 It 

2.50 

(( 

i(           (( 

1-35 

<< 

<(          <( 

1.70 

tt 

"  Deming 

2. IS 

11 

((        << 

3.20 

<( 

((        It 

1-75 

(( 

((        (( 

2. 12 

11 

"  Socorro 

1-35 

tt 

H                 11 

1.70 

tt 

tt           tt 

115 

tt 

tt          tt 

1.60 

■     ■  »  'm 


42 


UNIVERSITY  OF   COLORADO   STUDIES 


\ 


The  freight  rate  was  usually  from  50  per  cent,  to  75  per  cent,  more 
from  Denver  to  points  in  Arizona  and  New  Mexico  than  from  Kansas  City 
600  or  700  miles  farther  distant.  Much  the  same  situation  prevailed 
with  regard  to  the  freight  rates  from  Omaha.  ^  These  rates  show  that 
the  man  with  the  capital  to  invest  in  manufacturing  enterprises  would  be 
driven  out  of  Colorado  and  would  probably  locate  his  factory  at  some 
point  on  the  Missouri  River. 

From  the  railway  point  of  view  some  light  is  shed  on  the  above  table 
of  rates  by  the  testimony  of  Mr.  Hamblin,  the  general  freight  agent  of 
the  Santa  Fe.  He  stated  that  the  rate  tariff  was  made  the  last  of  1882 
or  early  in  1883,  and  that  according  to  this  tariff,  the  rates  were  as 
shown  in  the  table.  The  aim  of  the  railroad  at  that  time  was  to  increase 
its  revenues.  Since  January,  1884,  Mr.  Hamblin  said  this  tariff  had  not 
been  in  use.  Formerly,  however,  this  road  had  discriminated  against 
goods  made  in  Colorado  and  was  not  anxious  to  encourage  manufactures 
there.  He  verified  the  statements  of  Mr.  Davis  concerning  the  purchase 
of  the  hoisting  engine.  The  freight  rate  on  this  machinery  was  higher 
if  the  article  was  made  in  Colorado.^  In  explanation  of  the  desire  of  the 
railroad  to  prevent  the  growth  of  manufactures  in  the  state,  Mr.  Hamblin 
said  the  Santa  Fe  was  at  that  time  getting  19  per  cent,  of  the  business  of 
the  Colorado  pool,  "  and  of  course,  controlling  all  of  that  line  from  Kan- 
sas City  clear  down  here,  we  naturally  wanted  to  make  as  much  money 
as  we  possibly  could  and  we  made  a  distinction  between  manufactured 
articles  and  those  that  we  shipped  in."^ 

Mr.  Hughes,  trafl&c  manager  of  the  Rio  Grande,  stated  that  the 
freight  rates  were  made  before  there  were  any  manufacturers  in  the 
state,  and  that  it  was  the  desire  of  the  railroad  companies  to  bring  in 
manufactured  products  cheaply  enough  so  that  people  could  live  in 
the  Rocky  Mountain  region.  The  railroads  tried  to  favor  the  con- 
sumer rather  than  stimulate  manufacturers.  He  said  there  was  some 
justice  in  the  complaints  that  were  at  that  time  made  by  the  persons 
desiring  to  start  manufacturing  in  Colorado,  and  that  his  railroad  was 


«  Evidence^  Special  Railroad  CommiUee,  p.  107. 
•  Ibid.,  p.  254-    See  supra,  p.  25. 


3  Ibid.,  pp.  254,  255. 


FREIGHT  RATES  AND  MANUFACTURES  IN  COLORADO 


43 


X 


willing  to  make  a  difference  between  the  rate  on  the  raw  material  and  the 
manufactured  product.  He  thought  that  if  coal,  coke  and  iron  were 
abundant  in  the  state  the  policy  of  the  railroads  toward  manufactures 
might  be  changed.  His  road  was  not  willing  to  haul  in  everything  needed 
in  manufacture  and  thereby  allow  manufactures  to  develop  in  the  state 
by  keeping  up  the  price  of  the  finished  article. 

In  1882,  the  Colorado  Coal  and  Iron  Company  began  the  manufac- 
ture of  nails.     Immediately  thereafter,  the  Union  Pacific  lowered  the 
rate  on  nails  from  the  Missouri  River.     Prior  to  their  manufacture  in 
Colorado,  the  rate  had  been  $i .  25;  it  was  reduced  to  one  dollar  as  soon 
as  the  Coal  and  Iron  Company  began  to  turn  out  this  product.     There 
was  likewise  a  lowering  of  the  rate  on  everything  the  company  turned 
out  as  soon  as  they  began  the  process  of  manufacture.     Mr.  Shelby  of 
the  Union  Pacific  testified  that  this  lowering  of  the  rates  was  true.     He 
said  there  had  been  some  "isolated  cases. "^    In  the  spring  of  1884  a 
large  territory  was  opened  up  to  the  Coal  and  Iron  Company  on  account 
of  a  change  in  the  freight  rates  which  allowed  the  company  to  compete 
with  the  eastern  dealers  in  the  country  north  and  west  of  Denver.     The 
company  was  able  in  January,  1885,  to  ship  its  products  to  George- 
town, Central  City,  Idaho  Springs,  Erie,  Greeley,  Boulder  and  other 
points  which  were  inaccessible  to  it  ten  months  previous  to  the  beginning 
of  the  year  1885.     The  iron  ore  used  by  the  company  in  this  manufac- 
ture was  a  Colorado  product  which  came  from  the  mines  at  Calumet 
and  Villa  Grove.*    Mr.  Hughes  stated  that  the  Union  Pacific  had 
formerly  had  a  rate  from  the  Missouri  River  to  Salt  Lake  that  was  the 
same  as  the  rate  from  Denver  to  Salt  Lake,  but  when  the  new  pool  was 
formed  and  the  rates  restored,  the  Rio  Grande  had  obtained  a  con- 
cession that  the  rates  from  Colorado  points  to  Salt  Lake  should  be 
something  like  70  per  cent,  of  the  rates  from  the  Missouri  River  to 
Utah.    In  consequence  of  this,  the  Colorado  Coal  and  Iron  Company 
was  selling  nails  all  over  Utah  and  doing  the  entire  business  there.    After 
this  pool  went  into  operation,  the  rate  on  nails  from  the  Missouri  River 
to  Utah  was  $1 .  50  while  from  Pueblo,  it  was  ninety  cents.^ 


*  Ibid.,  p.  223. 


'Ibid.,  pp.  218,  219. 


3  Ibid.,  pp.  191,  193. 


I 


44 


UNIVERSITY  OF  COLORADO  STUDIES 


The  reasons  for  the  reduction  in  the  freight  rate  so  as  to  enable  the 
company  to  sell  in  the  above  district  and  in  Utah  were  due  to  the  activity 
of  the  Rio  Grande  which  was  friendly  to  the  Coal  and  Iron  Company  as 
stockholders  of  the  railroad  were  largely  interested  in  the  company, 
owning  half  of  its  stock.  When  the  pool  was  formed,  they  insisted  upon 
a  readjustment  of  the  rates  by  the  Union  Pacific  so  that  the  company 
might  be  able  to  sell  its  products  in  a  larger  territory. 

The  origin  of  the  Colorado  Coal  (Fuel)  and  Iron  Company  at  least 
as  far  as  it  has  become  a  factor  in  the  manufacturing  industry  of  the 
country  is  due  to  its  reliance  upon  railroad  assistance.  Had  it  been 
deprived  of  the  close  relation  with  the  railroad  interest,  it  is  very  doubt- 
ful whether  or  not  it  would  have  been  able  to  grow  into  the  great  manu- 
facturing concern  it  has  become. 

About  1873,  the  Rio  Grande  railroad  was  built  into  Pueblo.  General 
Palmer,  the  builder,  got  into  difficulty  when  the  road  had  reached 
this  city  and  found  himself  short  of  funds.  He  wished  to  build  the  road 
from  Pueblo  to  Canon  City,  a  distance  of  42  miles.  The  Colorado 
Coal  and  Iron  Company  had  many  coal  and  ore  lands  in  the  vicinity 
of  Canon  City  which  they  wished  to  develop.  The  Coal  and  Iron  Com- 
pany, therefore,  raised  the  money  needed  to  build  the  road  to  Canon 
City,  taking  in  exchange  therefor  the  stock  of  the  railroad.  In  this  way 
the  road  was  successfully  extended  to  that  point.  In  a  similar  fashion, 
another  company  bought  up  the  coal  and  iron  lands  around  Trinidad, 
Huerfano  and  some  other  points,  and  then  turned  over  one  half  of 
their  interests  to  the  raikoad  and  on  these  properties,  the  funds  were 
raised  with  which  the  railroad  was  built  to  Trinidad.  In  1880  or  1881, 
in  order  to  develop  the  resources  along  the  road.  General  Palmer  got 
the  men  interested  in  these  properties,  both  at  Trinidad  and  at  Canon 
City,  to  put  up  capital  for  a  steel  plant  at  Pueblo.  All  the  companies 
were  consolidated  into  the  Colorado  Coal  and  Iron  Company.  About 
$2,500,000  was  expended  at  that  time.  The  two  contracts  which  had 
formerly  been  made  by  the  railroad  by  which  special  favors  were  granted 
to  the  companies  in  the  matter  of  freight  rates  were  then  consolidated  into 
one  contract  with  the  combined  company.    This  contract  extended  spe- 


FREIGHT  RATES  AND  MANUFACTURES  IN  COLORADO 


45 


^ 


^ 


>. 


cial  favors  to  the  company  in  the  matter  of  freight  rates  as  the  company 
had  united  with  Palmer  in  the  development  of  the  coal  and  ore  beds  and 
was  therefore  entitled  to  a  good  bargain.  This  is  why,  according  to  the 
evidence  of  the  receiver  of  the  Rio  Grande,  no  other  companies  were 
allowed  to  sell  coal  in  Leadville  except  the  Colorado  Coal  and  Iron 
Company.^  This  also  explains  why  the  above  company  shipped  coal 
from  Coal  Creek  to  Pueblo  at  two  dollars  less  a  ton  than  could  other 
shippers  at  Canon  City.  The  discrimination  was  even  greater  than  two 
dollars  ordinarily  at  that  point.*  This  is  also  sufficient  to  explain  the 
refusal  of  the  Rio  Grande  to  furnish  cars  to  the  other  companies  even 
though  a  number  of  the  cars  desired  were  at  that  time  standing  empty 
on  the  side  track.^ 

Concerning  the  railroad  attitude  toward  manufactures  in  Colorado 
Mr.  Shelby,  the  general  freight  agent  of  the  Union  Pacific,  said : 

It  would  be  to  the  interest  of  the  Union  Pacific  Company  to  so  adjust  their 
rates  between  the  Missiouri  River  and  those  Colorado  central  points,  as  to  make 
it  to  the  interests  of  the  merchants  at  these  points  or  at  the  Missouri  River,  but 
when  you  come  to  go  a  step  further,  you  will  see  that  would  turn  the  jobbing  mer- 
chant of  Denver  against  us,  if  we  were  to  pursue  that  policy;  so  from  a  business 
standpoint,  we  find  it  to  our  interest  to  so  adjust  our  rates  as  to  give  the  Denver 
merchant  the  benefit  of  dealing  with  all  the  merchants  in  Colorado.  There  may 
be  some  few  instances  where  this  plan  is  not  lived  up  to.* 

A  number  of  wholesalers  had  already  shown  that  this  plan  was  not 
generally  lived  up  to.  In  theory  the  rate  to  the  points  in  central  Colo- 
rado was  the  rate  to  Denver,  plus  the  local  rate,  but  a  number  of  instances 
are  recorded  where  the  dealer  in  the  interior  of  the  state  got  the  same  rate 
as  the  Denver  dealer.  As  far  as  the  manufacturer  was  concerned,  Mr. 
Shelby  said  the  Union  Pacific  was  willing  to  make  the  freight  rate 
on  raw  materials  90  per  cent,  of  the  rate  on  manufactured  articles  in 
order  to  encourage  manufactures  in  Colorado.  ^ 

As  to  the  general  question  of  freight  rates  from  the  East  to  the  Rocky 
Mountains,  it  is  clear  that  very  great  pressure  was  brought  to  bear  on 


'  Evidence,  Special  Railroad  Committee,  p.  206. 

*  Ibid.,  p.  19;  Colorado  Daily  Tribune,  January  i,  1885, 

3  Evidence,  Special  Railroad  Committee,  p.  67.  *  Ibid.,  p.  340. 


s  Ibid.,  p.  228. 


^6  UNIVERSITY  OF  COLORADO  STUDIES 

the  railroads  by  the  manufacturers  of  the  eastern  states  to  induce  them 
to  keep  the  rate  favorable  for  the  shipment  of  eastern  articles  to  that 
region.  It  was  not  a  matter  of  purely  selfish  interest  on  the  part  of  the 
raib-oads  alone ;  whatever  selfish  interest  in  the  matter  they  may  have  had 
was  greatiy  reinforced  by  a  similar  interest  on  the  part  of  the  eastern 
manufacturers.  This  is  made  vividly  apparent  by  the  testimony  of 
Mr.  Daniels  who  was  at  that  time  the  official  charged  with  the  adminis- 
tration of  the  Colorado  pool.  Repeatedly  during  1884,  and  even  as  late 
as  the  month  of  January,  1885,  the  railroads  were  requested  by  manu- 
fecturers  in  the  East  to  lower  the  rates  on  manufactured  goods  shipped 
to  the  Rocky  Mountain  region.  The  reasons  stated  in  these  petitions 
were  that  the  eastern  dealers  and  manufacturers  were  losing  trade  in 
Colorado  on  account  of  the  growth  of  manufactures  there.  The  pool 
commissioner,  Mr.  Daniels,  said  the  roads  refused  to  do  this  as  they 
felt  that  in  the  end  reasonable  protection  to  the  manufacturers  of  Colo- 
rado would  increase  the  profits  of  those  engaged  in  the  transportation 

business. 

On  January  4,  1885,  a  meeting  of  the  general  freight  classification 
committee  was  held  in  St.  Louis.  At  this  meeting  a  number  of  con- 
cessions were  made  to  Colorado  manufacturers.  Wagon  wood  was 
reduced  from  class  A  to  class  B  so  as  to  promote  the  manufacture 
of  wagons  in  Colorado.  Iron  bridge  material  which  had  been  for 
some  years  in  class  B  was  advanced  to  class  A.  This  was  protecting 
the  Colorado  iron  manufacturer.  A  petition  from  important  shippers 
was  presented  to  the  classification  meeting  asking  for  a  reduction  of 
the  freight  rate  on  soap  from  the  East  to  Colorado,  and  stating  that 
soap  was  being  made  in  that  state.  The  Colorado  roads  protested  against 
any  reduction  in  this  rate  and  the  rate  was  not  changed.  A  similar 
petition  was  presented  from  the  manufacturers  of  matches  asking  for 
a  reduction  in  the  carload  rate  to  Colorado  and  stating  that  matches 
were  being  made  in  the  state,  and  in  consequence,  the  market  for  east- 
erners was  being  destroyed.  This  request  was  also  opposed  by  the 
Colorado  railroads  and  the  rate  was  not  changed.^ 

It  was  also  shown  by  Mr.  Daniels  that  the  railroads,  in  August, 

«  EvidemcCy  Special  Railroad  Committee,  pp.  265,  266. 


X 


FREIGHT  RATES  AND  MANUFACTURES  IN  COLORADO 


47 


1884,  had  reduced  the  freight  rates  on  the  different  classes  of  freight 
from  the  Missouri  River  to  Colorado  common  points.  These  reduc- 
tions had  been  made  on  the  demands  of  the  business  men  of  the  leading 
cities. 

FREIGHT  RATE  REDUCTIONS  FROM  MISSOURI  RIVER  TO  COLORADO 

ist  class  reduced  from  $2 .  40  to  $2 .  10  a  cwt. 
2d     "  "  "      " " 


3d 

4th 

5th 


<( 


(( 


« 


(( 


(( 


{( 


II 


2.00 

1-75 

1-35 
1.25 


(( 


<< 


It 


1.70 
1.40 

IIS 
1. 00 


(( 


(( 


(( 


It  was  said  that  these  reductions  were  very  nearly  and  in  some  cases 
"quite  the  rates"  asked  by  the  shippers.  Mr.  Daniels  said  this  was 
evidence  of  the  attitude  of  the  railroads  on  the  freight  rate  question.' 

On  January  30,  1885,  a  circular  was  sent  out  by  the  Denver  chamber 
of  commerce  and  board  of  trade  containing  a  letter  which  had  been 
addressed  to  the  president  of  that  body  three  days  before  by  the  officials 
representing  the  railroads  of  the  state.  The  circular  of  the  chamber 
of  commerce  aimed  to  call  the  attention  of  the  world  to  Colorado  as  a 
desirable  place  for  the  establishment  of  manufacturing  enterprises.  It 
contains  the  following: 

"Many  persons  in  failing  health  in  the  eastern  states  familiar  with 
manufacturing  and  desiring  to  establish  their  particular  industries  here 
so  as  to  secure  the  benefit  of  our  wonderful  climate,  have  hesitated  from 
fears  of  railroad  opposition.  The  subjoined  letter  clearly  proves  that 
the  railroad  companies  themselves  want  this  idea  eradicated."* 

At  the  meeting  of  railroad  officials  at  which  it  was  decided  to  issue  this 
letter  to  the  president  of  the  chamber  of  commerce,  all  the  railroads  in 
the  Colorado  pool  were  represented.  The  general  traffic  manager,  and 
general  freight  agent  of  the  Union  Pacific,  assistant  general  manager, 
and  general  freight  agent  of  the  Burlington  and  Missouri  River,  the 
traffic  manager  of  the  Santa  Fe,  the  traffic  manager  of  the  Rio  Grande, 
and  Mr.  Daniels,  the  commissioner  of  the  Colorado  Railway  Association, 
were  present.    The  letter  is  as  follows: 

'  Ihid.,  p.  267. 
Ihid.,  p.  264. 


48 


UNIVERSITY  OF   COLORADO   STUDIES 


IMPORTANT  TO  MANUFACTURERS 

Colorado  Railway  Association 
Union  Pacific  Railway 
Burlington  and  Missouri  River  Ry. 
Atchison,  Topeka  and  Santa  Fe  Ry. 
Denver  and  Rio  Grande  Ry. 
Denver,  South  Park  and  Pacific  Ry. 

Office  of  the  Commissioner 

Denver,  Colo,,  Jan.  27,  1885 
R.  W.  Woodbury,  Esq.,  President  of  the  Denver  Chamber  of  Commerce  and  Board 

of  Trade,  Denver,  Colo.: 

Dear  Sir:  I  am  instructed  by  the  managers  of  the  lines,  members  of  the  Colo- 
rado Railway  Association,  to  say  to  you  that  they  will  be  glad  to  use  every  means 
within  their  power,  consistent  with  a  broad  commercial  policy,  to  encourage  manu- 
factures in  Colorado  and  to  foster  and  build  up  her  home  institutions;  and  to  this 
end  they  will  be  pleased  at  all  times  to  meet  through  their  representatives,  com- 
mittees of  your  association  or  others  for  the  purpose  of  discussing  means  for  the 
advancement  of  such  interests,  believing  as  they  do,  that  the  interests  of  the  people 
of  the  state  of  Colorado  and  of  the  railroads,  members  of  this  association,  are  largely 
identical,  and  that  whatever  legitimately  advances  your  interests  must  advance  the 
interests  of  these  railways.  The  association  invites,  through  your  Chamber  of 
Commerce,  the  attention  of  manufacturers  of  the  United  States  to  the  natural  advan- 
tages of  the  Rocky  Mountain  country  for  the  establishment  of  industrial  enterprises.^ 

^  In  the  light^of  what  happened  in  the  years  succeeding  the  issue  of 
this  circular,  it  has  been  said  that  it  was  not  issued  in  good  faith.  This 
would  probably  be  hard  to  prove.  It  is  true  it  was  issued  at  a  time  when 
an  investigation  of  the  freight  rate  question  was  being  conducted  by  a 
legislative  committee  and  the  fear  of  adverse  legislation  might  have  had 
some  influence  on  the  minds  of  the  railroad  managers.  However  this 
may  be,  it  is  certain  that  the  high  promises  concerning  the  establishment 
of  manufactures  in  Denver  and  Colorado  generally  that  are  apparently 
embraced  in  the  provisions  of  the  letter  were  not  fulfilled  by  a  favorable 
adjustment  of  freight  rates. 

»  Second  Annual  Report  of  Chamber  of  Commerce,  1884-85,  p.  21. 


4\> 


A 

^ 


r, 


Chapter  IV.    1885-1896 

Notwithstanding  the  fair  promises  held  out  in  the  letter  of  the  pool 
commissioner  to  the  president  of  the  Denver  chamber  of  commerce,  the 
disadvantageous  freight  rates  of  which  the  shippers  complained  were 
not  generally  readjusted.  The  legislative  committee  worked  up  con- 
siderable public  sentiment  by  their  investigation  and  as  a  result  of  it  the 
legislature  passed  a  law  providing  for  the  appointment  of  a  railroad 
commissioner.  The  law  was  approved  April  6,  1885.^  The  commis- 
sioner displayed  considerable  activity  and  published  a  creditable  report 
covering  the  year  1885.  No  report  was  published  for  the  year  1886  as 
there  was  no  appropriation  to  pay  for  it.^  No  future  appropriations 
were  made  to  pay  the  salary  of  the  commissioner.  It  has  been  said  that 
the  railroad  lobby  defeated  the  appropriations  and  finally  compelled 
the  repeal  of  the  law  in  1893.3  Whatever  was  the  attitude  of  the  rail- 
roads in  this  matter,  it  does  not  appear  that  their  rate  policy  was  changed. 
There  is  abundant  evidence  that  very  little  had  been  done  to  encourage 
manufacturers  by  favorable  freight  rates  during  the  period  from  1885 
to  1896. 

The  following  is  taken  from  the  address  of  the  president  of  the  Denver 
chamber  of  commerce  delivered  in  January,  1886: 

•  Your  directory  is  unwilling  to  believe  that  Denver,  a  city  aspiring  to  become 
a  commercial,  manufacturing  and  distributing  centre,  advertising  itself  to  the  world 
as  such,  can  aquiesce  in  and  much  longer  continue  a  condition  which  is  delaying  its 
natural  growth  and  development  of  business  year  by  year.  It  is  useless  to  say  that 
freight  charges  in  and  out  of  Denver,  are  so  because  of  so  and  so.  The  fact  remains 
that  Denver,  amongst  many  characteristics,  enjoys  or  seems  to  prefer  the  distinction 
of  being  the  highest  charged  town  in  the  country.* 

»  This  act  was  supposed  to  give  the  commissioner  sufficient  power  over  rates  to  prevent  discrimination 
though  it  did  not  say  he  had  the  power  to  make  rates.  It  empowered  him  to  have  compulsory  process  to 
secure  the  attendance  of  witnesses,  obtain  books,  papers  etc.  in  the  investigation  of  railroad  affairs. 

»  A  small  report — 21  pages — covering  the  years  1891-92  was  published  in  1893. 

»  The  repealing  act  was  vetoed  by  the  governor,  but  passed  both  houses,  March  30,  1893,  by  a  two- 
thirds  vote  and  so  became  law.  It  was  given  effect  in  these  words:  "Inasmuch  as  the  public  interest  requires 
that  this  act  should  take  effect  at  once,  an  emergency  exists  requiring  this  act  to  take  effect  immediately;  there- 
ore  this  act  shall  take  effect  and  be  in  force  from  and  after  its  passage."— 5«5kw  Laws  of  Colorado,  1893, 
chap,  cxxxvi. 

*  Report  of  the  Chamber  of  Commerce,  Denver,  p.  7,  1896. 

49 


so 


UNIVERSITY  OF  COLORADO  STUDIES 


Again  in  a  similar  address  some  years  later  is  the  following: 

It  is  not  possible  that  the  railroads  centering  here  can  much  longer  ignore  the 
importance  of  the  enormous  tonnage,  but  must  see  that  it  is  to  their  interest  to  give 
to  our  manufacturers  and  jobbers  a  freight  rate  that  will  permit  of  the  distribution 
of  goods  to  a  much  greater  distance  than  they  now  enjoy.  In  fact  each  year  the 
dealeis  have  to  cut  the  profits  to  hold  their  trade  to  far  distant  points.  Yet  with  the 
discriminations  by  the  railroads  in  favor  of  cities  located  on  navigable  waters,  the 
tonnage  continues  to  develop,  and  when  they  see  fit  to  foster  the  manufacturers  and 
give  to  them  equal  rates  with  those  located  to  the  east,  Denver  will  be  the  most 
important  dty  between  Chicago  and  San  Francisco.^ 

An  illustration  of  the  attitude  of  the  railways  toward  the  development 
of  manufactures  appears  in  the  testimony  of  Professor  Ripley  and  Mr. 
Kindel  before  the  United  States  Industrial  Commission.  During  the 
years  1890-92,  a  number  of  men  had  planned  to  build  a  pulp-  and  paper- 
mill  in  Denver  and  use  the  raw  materials  of  that  section  to  manufacture 
paper  for  the  newspapers  that  circulate  in  the  Rocky  Mountain  region. 
In  this  way  it  was  thought  the  great  expense  of  shipping  this  commodity 
a  thousand  miles  might  be  avoided.  Plans  were  under  way  when  the 
attention  of  one  of  the  railroads  was  called  to  the  matter,  and  the  officials 
of  the  railroad  informed  the  promoters  that  if  a  paper-mill  was  built  in 
Denver,  and  thereby  the  shipment  of  paper  from  Wisconsin  interfered 
with,  the  railroads  would  kill  the  enterprise  at  any  cost  to  themselves. 
This  they  threatened  to  accomplish  by  lowering  the  freight  rate  on  paper 
from  the  East.  The  promoters  were  greatly  discouraged,  but  as  the 
freight  rate  was  very  high,  they  decided  to  build  the  mill.  Plenty  of 
timber  was  available  in  the  near-by  mountains.  Coal  mines  were  in 
active  operation  within  twenty  miles  of  Denver.  The  promoters  thought 
there  was  every  reason  to  believe  the  mill  would  succeed  owing  to  the 
great  expense  of  hauling  paper  1,000  miles  from  Wisconsin.  The  rate 
on  incoming  paper  had  been  $1 .  55  a  hundred,  and  the  complaints  about 
the  high  rate  had  been  one  of  the  leading  causes  that  had  led  to  the  erec- 
tion of  the  mill.  As  soon  as  the  mill  went  into  operation,  the  railroads 
reduced  the  rate  on  incoming  paper  to  $0.25  a  hundred.  The  profits 
of  the  enterprise  were  greatly  cut  down  and  the  mill  finally  closed.^ 

»  Report  of  the  Chamber  of  Commerce,  Denver,  p.  57.  iSpS- 

•Report  of  the  Industrial  Commission,  Vol.  IV,  p.  264,  1902;  ibid..  Vol.  IX,  p.  287. 


%* 

fr 


FREIGHT  RATES  AND  MANUFACTURES  IN  COLORADO 


SI 


Whether  or  not  the  closing  of  the  mill  was  due  entirely  to  the  low  rate 
on  incoming  paper  is  not  important  in  this  connection.  The  incident 
is  important  as  showing  the  disposition  of  the  great  traction  interests 
toward  the  development  of  an  industry  which  was  likely  to  reduce  their 
profits  from  freight  haulage. 

Under  the  schedule  of  freight  rates  in  force  in  1894,  Chicago  and 
St.  Louis  manufacturers  could  ship  mining  machinery  and  supplies  to 
points  in  New  Mexico  and  Arizona  "a  great  deal  cheaper"  than  the 
same  class  of  goods  could  be  laid  down  from  Denver.  It  was  said  that 
as  a  matter  of  fact  this  was  the  case  with  all  kinds  of  manufactured  ar- 
ticles. The  freight  tariff  at  that  time  was  prohibitory  and  closed  Mexico 
to  Colorado  manufacturers  and  jobbers.  As  a  general  rule  the  rates 
were  the  same  from  Omaha  to  Denver  and  to  Salt  Lake  although  the 
latter  point  was  800  miles  farther  west.  The  result  of  all  this  was  that 
the  Colorado  shipper  was  at  the  mercy  of  the  eastern  manufacturer. 
Chicago  was  closer  to  New  and  Old  Mexico  than  was  Denver.  This 
is  one  of  the  ways  in  which  the  railroad  annihilates  space.  Manufac- 
turers of  mining  machinery  in  Denver  stated  that  were  that  city  placed 
on  an  equal  footing  with  the  other  centres,  they  could  increase  their 
trade  threefold  within  a  year.  Even  as  it  was,  the  enterprise  of  the 
local  manufacturer  had  in  some  degree  overcome  the  hardship  imposed 
by  the  railroad  discrimination.' 

On  August  17,  1896,  the  Citizens'  League  of  Arapahoe  County 
adopted  a  resolution  declaring  that  railroad  discrimination  had  retarded 
the  development  of  the  resources,  crippled  manufactures  and  diminished 
the  commerce  of  the  state  to  a  point  below  the  volume  it  had  attained 
in  1884.  The  resolution  also  demanded  that  a  promise  be  exacted  from 
all  candidates  for  the  legislature  that  they  would  use  their  best  efforts 
to  enact  laws  for  the  establishment  of  an  efficient  state  railroad  commis- 
sion with  power  to  prevent  unjust  discriminations  and  charges.  ="  Per- 
haps some  allowance  should  be  made  for  other  causes  which  had  reduced 
the  commerce  of  Colorado  at  the  time  this  resolution  was  adopted.  The 
closing  of  the  silver  mines  between  1893  ^-nd  1896  was  an  important 

«  Denver  Republican,  January  i,  1895. 
•  Ibid.,  August  18,  1896. 


^ 


!^ 


5t  UNIVERSITY  OF  COLORADO  STUDIES 

factor  in  bringing  on  the  depression  which  prevailed  during  the  latter 
year.  However,  the  resolution  shows  that  the  freight  rate  discrimination 
was  felt  to  be  a  serious  grievance. 

On  May  21,  1896,  the  Denver  chamber  of  commerce  adopted  a 
resolution  stating  that  Colorado  industries  were  subject  to  extortionate 
and  discriminative  transportation  rates,  and  that  these  rates  had  reduced 
the  volume  of  business  in  many  lines  below  that  of  1884.  The  resolution 
also  provided  for  the  appointment  of  a  committee  of  three  to  solicit 
money  to  carry  on  the  fight  for  fair  freight  rates.  ^ 

It  is  thus  apparent  that  in  1896  the  freight  rates  were  complained  of 
by  the  most  prominent  business  organizations  and  the  newspapers. 
Whether  or  not  there  was  justice  in  these  complaints  of  the  shippers  can 
be  determined  by  an  examination  of  the  rates  themselves.  The  following 
table  gives  the  conmiodity  rates  in  force  in  1896,  Chicago  to  CaHfomia 
and  to  Colorado.  A  glance  is  sufficient  to  show  that  everything  was 
charged  more  if  it  stopped  in  Colorado  than  if  it  went  on  through  to  the 
Coast. 

Transcontinental  Commodity  Rates,  1896* 


Boots  and  shoes 

Burial  cases 

Carpets 

Carpet  linings 

Cash  rq^isters 

Clothing 

Coffee  (roasted  and  ground) 

Chocolate  L.  C.  L 

Dry  goods 

Drugs  and  medicines 

Earthenware  (plumbers') 

Glass  (plate) 

Glass  (colored,  decorated  etc.) 

Hair  (compressed,  etc.) 

Hardware 

Hose  (garden) 

Iron  and  steel  (bar,  road,  hoop  etc.). 

Iron  and  steel  (boiler  and  plate) 

Iron  pipe 


Chicago  to  California 

Chicago  to  Colorado 

Terminals.     Average 

Common  Points.     Aver- 

Distance 2,500  Miles 

age  Distance  1,000  Miles 

$1.50 

$2.05 

1.50 

3  07  J 

1-75 

2.05 

1.50 

2.05 

2.40 

4.10 

1.50 

2.05 

.80 

I. 25 

1.50 

2.05 

1. 00 

2.05 

1 .20 

2.05 

1. 00 

1 65 

1.50 

6.15 

1.50 

6. IS 

1 .00 

2.05 

1. 00 

1.65 

1. 00 

2.05 

•50 

•77 

.60 

•77 

•50 

•77 

.4- 


t 


\^ 


% 


FREIGHT  RATES  AND  MANUFACTURES  IN  COLORADO 
Transcontinental  Commodity  Rates,  1896 — Continued 


53 


Iron  (roofing  and  corrugated) 

Iron  horseshoes 

Iron  bale  ties 

Japanned  ware 

Mats  (rubber) 

Miners'  leather-lined  clothing 

Money-drawers 

Mustard 

Mackintoshes 

Nails  and  spikes 

Nuts  (edible) 

Oilcloth  (floor)  and  linoleum 

Paint 

Paper  hangings 

Rubber  clothing 

Rattan  and  willow  furniture 

Spices 

Screens  (foundry) 

Sewing  machines 

Shoe  findings 

Slates  (school) 

Starch 

Stair  pads 

Sweaters 

Shirts 

Stoves  (gas,  oil  etc.) 

Tin  (pig  or  bar) 

Tiling  (art,  decorated  or  inlaid) 

Tapioca 

Tobacco  (smoking  or  cut  plug,  baled) 

Tobacco  in  barrels,  boxes  or  kegs 

Toys 

Type 

Varnish 

Wax  (for  sealing  canned  goods) 

Window  shades 

Water  closets 


Chicago  to  California 
Terminals.  Average 
Distance  2,500  Miles 


Chicago  to  Colorado 
Common  Points.    Aver- 
age Distance  1,000  Miles 


•77 
■57 
•57 
•05 
•05 
■05 
•05 
65 
05 
■57 
■15 

05 
1.65 

2.05 

2.05 

6.15 
2.05 

2.05 

2.05 

05 
OS 

25 

OS 

05 

05 

05 

65 

05 

65 

05 

65 
2.05 

1.65 
2.05 
2.05 

2.05 
2.05 


2 
2 

I 
2 
2 
2 
2 
I 
2 
I 
2 
I 


The  following  table  shows  the  commodity  rates  from  the  California 
terminal  points  to  Colorado  and  also  to  the  Missouri  River.  The  same 
characteristic  feature  appears  as  in  the  other  table.  It  cost  more  to  ship 
to  Colorado  than  to  points  on  the  Missouri  River. 


*  KofDEL,  A  B  C  of  Freight  Rates,  Denver,  p.  17,  1896. 
1  KiNDTX,  ibid,,  p.  9. 


54 


UNIVERSITY  OF  COLORADO  STUDIES 
Transcontinental  Commodity  Rates,  1896* 


-V 


w 


Agricultural  implements. 

Brushes 

Blankets 

Chocolate 

Sugar 

Dnigs  and  medicines . . . . 

Hides  (green) 

Honey 

Ink 


Lard  and  substitutes 

Machinery,  class  A 

Oilcloth  (floor)  and  linoleum. 

Paint  (earth  and  mineral) 

Rice 

Soap. 


Skins,  Russian  sable,  silver  fox,  sea  otter  and 

blue  fox 

Martin,  fisher,  cross  fox  and  white  fox 

Bear,  beaver,  otter,  mink,  lynx  and  red  fox  . 
Deer,  raccoon,  muskrat,  squirrel,  reindeer  etc  . 


*  KiNDEL,  op.  cit.,  p.  24. 


California  Terminals  to 

Kansas  City,  St.  Joseph 

and  Omaha,  2,157 

Miles 


1 .20 
1.50 
1 ,00 

•50 
1 .20 
1. 00 

•75 
1. 00 

1. 10 

1. 10 

•75 
•75 
•50 
•75 

350 
3.00 

2.80 

2.50 


California  Terminals  to 

Pueblo,  Colorado  Springs 

and  Denver,  1,545 

Miles 


$1 .40 
2.20 
2.50 
2.20 

•75 
3.00 


30 
10 

00 

30 
40 

90 

00 

1. 00 

.82 


6.00 
6.00 
6.00 
3.00 


.# 


Colorado  was  under  similar  disadvantages  when  it  came  to  shipping 
goods  out  of  the  state.  It  did  not  seem  to  be  the  scheme  of  the  man  who 
made  the  rates  to  allow  Denver  to  be  a  distributing  point.  The  follow- 
ing tables  giving  the  freight  rates  from  Colorado  cities  to  certain  points, 
and  also  the  rates  from  other  cities  to  these  same  points,  show  that  it 
generally  cost  more  to  ship  from  Colorado  than  from  other  cities  even 
though  in  the  latter  case  the  haul  was  often  much  longer. 

First  Class  Rates,  1895* 

New  York  to  San  Francisco 

Chicago  to  San  Francisco 

New  Orleans  to  San  Francisco 

Omaha  to  San  Francisco 

Denver  to  San  Francisco 


7 


Omaha  to  Salt  Lake. 
Denver  to  Salt  Lake. 


Chicago  to  El  Paso. 
Denver  to  El  Paso . . 


$1 

.00 

I 

.00 

I 

.00 

I 

.00 

3 

.00 

I 

I 

•65 
65 

I 

62 

2 

00 

•  KiNDEL,  op.  cit.,  p.  53. 


^ 


V 


FREIGHT  RATES  AND  MANUFACTURES  IN  COLORADO 


First  Class  Rates,  1895 — Continued 


55 


Omaha  to  Julesburg, 
Denver  to  Julesburg . 


Kansas  City  to  Haighler,  Neb. 

Omaha  to  Haighler,  Neb 

Denver  to  Haighler,  Neb 


Missouri  River  to  Chappell,  Neb. 
Denver  to  Chappell,  Neb 


Missouri  River  to  Rock  Springs,  Wyo. 
Denver  to  Rock  Springs,  Wyo 


$1.00 
.87 

.89 

.84 
.87 

1. 01 
1-25 

1.65 
1-65 


A  slight  advantage  in  rates  was  given  to  Denver  over  Missouri  River 
points  in  shipments  to  other  places  in  Wyoming.' 

Discrimination  in  Favor  of  Missouri  River  Points,  1896* 


Commodity  Rates 


Acid 

Agricultural  implements 

Babbit  metal 

Blue  vitrol 

Boots  and  shoes 

Bottles  (glass) 

Boxes  (paper) 

Brass  goods 

Brooms 

Brushes  (shoe,  scrub,  stove) 

Cans  (tin) 

Cars  (street) 

Car  seats  and  backs 

Cheese 

Chimneys  and  lantern  globes  (glass) 

China 

Clothing,  overalls 

Coffee  (roasted,  ground) 

Copper  goods 

Crockery  and  queensware 

Drugs  and  medicines 

Dry  goods 

Filters  (stone) 

Flasks  (glass) 

Fuel  (composition) 

Fuse 

Glass  (window) 

*  KiNDEL,  op.  cit.,  p.  23. 

*  Ibid.,  p.  16. 


Omaha,  Kansas  City 

and  St.  Joseph  to 
California  Terminals 


$0.90 
I. OS 

•75 

•75 

I  50 

•65 

1. 00 

1 .00 

^•95 
1 .20 

•75 

1-35 
1.45 
1-65 

.90 
1 .00 
1.50 

.80 
1 .00 

•85 
1 .20 

1.50 

1 .00 

•65 
1 .00 

1 .20 
.65 


Denver,  Colorado 

Springs  and  Pueblo  to 

California  Terminals 


Pl.40 
1 .40 

1-75 
1 .60 

3.00 

1 .60 

6.00 

2.60 

3.00 

3.00 

1.60 

1 .40 

3.00 

2.60 

2.00 

3.00 

3.00 

2.00 

2.60 

I  .60 

3.00 

3.00 

1-75 
1 .60 

2.00 

3.00 

1.60 


\  \ 


56 


UNIVERSITY  OF  COLORADO  STUDIES 


FREIGHT  RATES  AND  MANUFACTURES  IN  COLORADO 


57 


Discrimination  in  Favor  of  Missouri  River  Points,  1896 — Continued 


Commodity  Rates 


Glassware 

Grates  (iron) 

Hosiery 

Hardware 

Ink 

Jars  and  glasses  (glass) 

Lamps  (glass) 

Lead  pipe 

Machinery  (class  A) . . . 

Matches 

Mining  car  wheels .... 

Pickles 

Pipe  (sewer  clay) 

Solder 

Soap 

Tinware 


Omaha,  Kansas  City 

and  St.  Joseph  to 
California  Terminals 


5  .85 
1 .00 
1 .20 
1. 00 
1 .00 

•6s 
1 .00 

•75 
1. 10 

1 .00 

1. 00 

.90 

•65 
1 .00 

•75 
•75 


Denver,  Colorado 

Springs  and  Pueblo  to 

California  Terminals 


$2.00 
1 .40 
3.00 


00 
00 
60 
00 
60 
40 

75 

75 
60 

.80 

2.00 

.82 

1-75 


Peculiarities  of  Freight  Rate  Discrimination,  1896* 

Rate 
Beer — 

Denver  to  Leadville,  151  miles $0.60 

St.  Louis  to  Leadville,  1,000  miles .70 

Denver  to  La  Junta,  180  miles .37 

Kansas  City  to  La  Junta,  571  miles .30 

Plate  glass:  commodity  rate — 

Chicago  to  Denver i  .25 

Chicago  to  San  Francisco i.io 

Single  large  plates — 

Chicago  to  Denver , 6. 15 

Chicago  to  San  Francisco 1.50 

Chocolate — 

Boston  to  Denver,  water  and  rail 2 .  29 

Boston  to  Denver,  all  rail 2 .60 

Boston  to  San  Francisco i  •  00 

Machinery:  class  A — 

Chicago  to  Denver i  -40 

Chicago  to  San  Francisco i  •  10 

•  Kdtoel,  op.  cit.,  pp.  24.  37- 


I 


fi 


') 


^ 


Oil— 

Chicago  to  San  Francisco .78^ 

Colorado  common  points  to  San  Francisco  .96 

Pickles — 

Chicago  to  San  Francisco .90 

Denver  to  San  Francisco i .  60 

Soap — 

Chicago  to  San  Francisco -75 

Chicago  to  Denver .77 

Denver  to  San  Francisco -82 

Freight  Rates,  Denver  to  San  Francisco,  1896* 


Chicago  to  San  Francisco. 
Denver  to  San  Francisco. 
San  Francisco  to  Denver. 


ist  Class 


$2.40 
3.00 

3 


00 


2d  Class 


$2.15 
2.60 
2.60 


3d  Class 


$2.00 
2.00 
1 .90 


4th  Class 


$1.70 
1-75 
^•55 


5th  Class 


?i.65 
1 .60 
1.30 


*  Kdtoel,  op.  cit.,  p.  36. 


The  following  table  of  rates  shows  the  impracticability  of  carrying 
on  the  jobbing  business  in  Denver  under  the  discriminations  prevailing 
in  1896.  Shale  is  a  town  on  the  Rio  Grande  Railway  28  miles  west  of 
Grand  Junction. 

Chicago  to  Omaha $0.80 


Omaha  to  Shale. 


$2 

Chicago  to  Denver $2 

Denver  to  Grand  Junction i 

Grand  Junction  to  Shale 


$4 
Denver  jobber's  rate  in  excess  of  Omaha's $1 


65 


45 
OS 
75 
35 


15 

70 


By  1895  the  jobbing  business  in  Colorado  had  not  reached  any  appre- 
ciable development,  most  of  the  jobbers  supplying  the  state  having  found 
it  more  profitable  to  locate  at  the  Missouri  River.' 

The  rate  on  cash  registers  illustrates  likewise  the  same  disadvantages 
of  the  jobber  at  that  time.* 

» Ibid.,  p.  14" 
•  Ibid.,  p.  37. 


^  UNIVERSITY  OF  COLORADO  STUDIES 

Cash  Registers 

Chicago  or  Kansas  City  to  San  Francisco $2 .  40 

Chicago  to  Denver 4- 10 

Denver  to  San  Francisco 6.00 

Denver  to  Grand  Junction 3-5o 

Denver  to  Salt  Lake 33° 

Some  time  previous  to  August,  1896,  Messrs.  Grove  &  Pryor,  jobbers 
of  hats  and  gloves  in  Denver,  shipped  600  pounds  of  gloves  frona  San 
Francisco.  On  receipt  of  them,  they  discovered  that  some  mistake 
had  been  made  in  fiUing  their  order  and  immediately  returned  the  gloves. 
They  were  much  surprised  to  find  the  rate  on  gloves  was,  San  Francisco 
to  Denver,  600  pounds  at  $2.00  a  cwt.,  $12.00;  return,  Denver  to  San 
Francisco,  600  pounds  at  $3.00  a  cwt.,  $18.00.' 

In  a  number  of  instances,  there  was  in  1896  a  discrimination  against 
manufactures  in  Colorado  by  a  higher  freight  rate  on  raw  material  than 
on  the  manufactured  goods.  This  is  quite  apparent  from  the  rate  on 
material  used  in  the  manufacture  of  mattresses. 

In  1883,  the  railroads  first  took  notice  of  the  manufacture  of  excelsior 
in  Colorado.  At  that  time  the  rate  from  the  Missiour  River  to  Denver 
was  $1 .40  a  cwt.  After  the  manufacture  of  excelsior  was  well  begun, 
the  freight  rate  was  reduced  to  fifty  cents  a  cwt.,  the  same  as  the  rate  on 
cord  wood.^  The  unfavorable  freight  rate  which  began  in  1883  was  still 
in  force  in  1895.  Manufactured  mattresses  were  charged  more  than 
the  raw  material  as  appears  from  the  following  table: 


100  pounds  of  curled  hair  in  sacks,  Chicago  to  Denver $4. 10 

15  pounds  of  ticking,  Chicago  to  Denver 


1 15  pounds  of  mattresses  m  a  car  of  furniture,  Chicago  to  Denver    i 
Raw  material  in  excess  of  manufactured  goods $3 


25 


35 
26 


09 


Mattresses  are  worth  at  least  10  per  cent,  more  than  the  raw  material 
on  account  of  the  added  labor.    A  grease  spot  wiU  injure  a  manufac- 


«  KiMDEL,  op.  cit.,  p.  37. 
•  Hid.,  p.  54- 


I. 


h, 


\ 


I 


K 


FREIGHT  RATES  AND  MANUFACTURES  IN  COLORADO  59 

tured  mattress,  but  hair  in  sacks  is  not  likely  to  be  injured  very  much 
in  transportation.  The  effect  of  these  rates  on  the  mattress  industry 
in  Denver  is  shown  by  the  fact  that  when  the  Brown  Palace  Hotel  was 
built  in  that  city,  the  hotel  company  bought  20,000  pounds  of  curled 
hair  mattresses,  and  at  that  time  the  freight  rate  was  so  adjusted  that 
had  the  company  bought  the  raw  material  and  had  it  shipped  in 
and  manufactured  in  Denver,  the  difference  in  the  freight  rate  alone 
was  so  great  that  it  would  have  added  $800  to  the  cost  which  the 
company  had  to  pay  for  the  mattresses  already  manufactured  in  the 

East  and  delivered.' 

The  same  disadvantage  appeared  at  that  time  when  Denver  was  con- 
sidered as  a  distributing  point.  The  Missouri  River  cities  were  favored 
by  the  rates.* 

100  pounds  of  moss.  New  Orleans  to  Omaha $0 .  59 

15  pounds  of  ticking,  Chicago  to  Omaha 07^ 

o .  66  J 

115  pounds  of  mattresses,  Omaha  to  Trinidad i  -43 

Total ^2-^ 

100  pounds  of  moss,  New  Orieans  to  Denver $1  •  59 

15  pounds  of  ticking,  Chicago  to  Denver 26 

$1.85 

115  pounds  of  mattresses,  Denver  to  Trinidad 82 

Total ^^-^7    ^ 

Difference  in  favor  of  Omaha ^-58 

A  Study  of  freight  rates  from  Denver  to  the  various  cities  which  served 
as  the  distributing  centres  of  the  country  shows  that  these  rates  were 
considerably  reduced  on  January  i,  1895,  and  remained  so  reduced  till 
November  i,  1895.  At  the  latter  date  they  were  raised  somewhat  though 
not  to  the  level  of  the  old  schedule.  The  changes  are  shown  in  the  fol- 
lowing table: 

» Ihid.,  p.  45. 
'Ibid. 


6o 


UNIVERSITY  OF  COLORADO  STUDIES 


FREIGHT  RATES  AND  MANUFACTURES  IN  COLORADO 


6l 


Rates  from  Denver  and  Colorado  Common  Points,  1896;*    Reduced  January  i, 

1895,  AND  Advanced  November  i,  1895 


Cbss 

I 

a 

3 

4 

5 

A 

B 

C 

D 

E 

To 

Chicago — 

Old  rate. . . . 

$2.32 

$1.90 

$1.52 

$1.20 

$1 .00 

$1.15 

$0.90 

$0.75 

$0.62j 

$0.56 

Reduced  . . . 

2.00 

1-55 

1 .22 

•95 

•75 

•85 

.70 

.60 

•.S2i 

.46 

New  rate . . . 

2.05 

1-65 

1-25 

•97 

•77 

.92 

•72 

.62 

•53* 

.46 

Peoria — 

Old  rate. . . . 

2.22 

1.80 

1.47 

1.14J 

•97i 

.Hi 

.86 

•72* 

.60 

•53* 

Reduced  . .  . 

1.90 

1-45 

1. 17 

•92i 

•72i 

.8ii 

.66 

•57i 

•50 

•43* 

New  rate . .  . 

1-95 

1-55 

1.20 

•94i 

•74* 

.88i 

.68 

•59i 

•51 

•43 

Mississippi 

River — 

Old  rate. . . . 

2.12 

1.70 

1.42 

i^i5 

•95 

1. 07  J 

.82J 

.70 

•57* 

•51 

Reduced  . . . 

1.80 

1-35 

1 .12 

.90 

.70 

•77i 

.62  J 

•55 

•47* 

.41 

New  rate . . . 

1. 8s 

1-45 

^•^5 

.92 

•72 

•84i 

•64* 

•57 

•48* 

.41 

St.  Paul- 

Old  rate 

2^I5 

17s 

1.42 

I-I5 

•93 

1.07 

.83 

.70 

•59 

•52 

Reduced  . . . 

1.80 

1 .40 

1. 12 

.90 

.68 

•77 

•63 

•55 

•49 

.42 

New  rate. . . 

i^85 

1.50 

I-I5 

.92 

.70 

•84 

•65 

•57 

•50 

•  42 

Missouri 

River — 

Old  rate 

1 .60 

1.30 

1. 10 

.90 

•75 

•85 

•65 

•55 

•45 

.40 

Reduced  . . . 

^•25 

•95 

.80 

•65 

•50 

•55 

•45 

.40 

•35 

•30 

New  rate . . . 

1-25 

1. 00 

.80 

•65 

•50 

.60 

•45 

.40 

•35 

•30 

Spohane,  etc. — 

Old  rate.... 

2.80 

2.40 

2.00 

1 .60 

1.40 

1.40 

1.24 

1. 00 

.88 

.72 

Reduced  . . . 

1.496 

1.32 

1 .29 

1. 16 

1.04 

1.04 

.712 

.648 

.624 

.56 

New  rate . . . 

2.40 

2.08 

1.76 

152 

1.20 

1. 16 

1. 00 

.88 

.76 

.68 

Helena — 

Old  rate. . . . 

2.00 

1.72 

1.40 

1. 16 

1. 00 

.88 

•736 

.656 

•576 

•49 

Reduced  . . . 

^■ZZ 

1 .20 

^•i3 

1 .04 

.96 

.88 

•67 

•59 

•.56 

.48 

New  rate . . . 

2.00 

1.72 

1.40 

1.20 

1 .00 

•92 

.80 

•72 

.60 

•52 

Galveston — 

Old  rate.... 

2.07 

173 

I  37 

1.07 

.88 

1.04 

.80 

•65 

•52* 

•46 

Reduced  . . . 

1-75 

1-38 

1.07 

.82 

•63 

•74 

.60 

•50 

•42* 

•36 

New  rate . . . 

1.30 

I -13 

•97 

.90 

.70 

•74 

•65 

•54 

•43 

•36 

Galveston 

to  Denver  . . 

1.80 

1.48 

1. 10 

.84 

•65 

.80 

.62 

•52 

•43* 

•36 

•  KiNDEL,  op.  Cit.,  p.  37. 

The  reasons  for  these  changes  are  hard  to  understand.  It 
may  be  that  the  railroads  were  experimenting  to  ascertain  what 
the  traffic  would  bear.  Some  have  interpreted  the  readjustment  of 
rates  as  a  fresh  attack  on  the  manufacturing  industries  then  starting 
in  Denver. 

For  some  time  before  1896  the  rates  discriminated  heavily  against 


% 


ft 


1 


5i 


Y 


^x 


'0 


I 

1" 


the  manufacture  of  iron  in  Pueblo  as  is  shown  by  the  following  table. 
They  were  lowered,  however,  in  April,  1896.^ 


Rails  (iron  and  steel) . . 

Iron  (bar) 

Iron  billets  and  blooms 

Iron  (pig) 

Iron  rivets 

Iron  nails 

Iron  pipe  (cast  iron) . , . 


April  IS,  1895,  Chicago 
to  San  Francisco 


$0.60 
.60 

•SO 
•50 
•50 
•50 
•50 


Same  Date  Pueblo  to 
San  Francisco 


h  .60 
1 .60 
1 .60 

•85 
1.60 
1 .60 
1 .20 


Reduced  April  28, 1896, 
Pueblo  to  San  Francisco 


$0.45 

•37* 
•37* 
•37* 
•37* 
•37* 
•37* 


This  reduction  in  rates  was  the  result  of  a  decision  and  order  of  the 
United  States  Inter-State  Conamerce  Commission  made  in  November, 
1895,  and  providing  that  the  rates  from  Pueblo  to  California  should  not 
exceed  75  per  cent,  of  the  rates  from  Chicago  to  California.  This  order 
the  railroads  refused  to  obey.  Court  proceedings  were  begun  by  the 
commission  to  enforce  the  order.  Then  the  railroads  obeyed  and  the 
rates  were  lowered  as  shown  above.  But  this  situation  was  not  to  last. 
They  kept  the  rates  down  about  two  years,  till  October  17,  1898.  Then 
the  Southern  Pacific  increased  the  rates.  The  Colorado  Fuel  and  Iron 
Company,  on  whose  complaint  the  investigation  and  order  was  made, 
sued  for  damages  and  an  injunction,  October,  1898.  The  Circuit  Court 
enjoined  the  railroads  from  charging  more  than  the  rates  fixed  by  the 
commission.  But  April  16,  1900,  the  Circuit  Court  of  Appeals  reversed 
the  decision  on  the  ground  that  the  United  States  Supreme  Court  had 
ruled  that  the  commission  cannot  fix  rates.* 

Notwithstanding  a  vigorous  campaign  by  Denver  shippers  and  manu- 
facturers to  secure  Missouri  River  commodity  rates  for  Denver,  they  were 
denied  and  the  following  excuse  was  given  by  Mr.  W.  A.  Poteet,  secretary 
of  the  Southern  Pacific  Company,  in  a  letter  dated  July  21,  1896.  The 
statement  is  as  follows: 

That  it  was  not  considered  that  the  circumstances  would  justify  the  application 
of  the  transcontinental  basis  of  rates  to  Denver  and  common  points  without  making 

*  Ibid.,  p.  12. 

•  Inter-State  Commerce  Commission  Reports,  pp.  41-43,  1895;  pp.  55-61,  1900;  loi  Fed.  779. 
The  appeal  to  the  Supreme  Court  was  dismissed  by  stipulation,  November  1901  (46  L.  Ed.  1264);  Parsons, 
Heart  of  the  Railroad  Problem,  p.  92. 


N 


62 


UNIVERSITY   OF  COLORADO  STUDIES 


the  same  basis  applicable  in  surrounding  territory  and  such  action  would  be  more 
apt  to  have  an  injurious  effect  upon  the  industries  of  Denver  and  other  centers  of 
trade  in  Colorado  than  would  the  continuance  of  the  present  rates.^ 

Since  1896  there  has  been  much  improvement  in  the  attitude  of  the 
transportation  companies  toward  the  development  of  Denver  as  a  manu- 
facturing and  distributing  centre,  but  as  yet  the  freight  rates  are  far  from 
satisfactory  and  the  evil  effect  of  the  old  rates  on  the  city's  growth  has 
not  been  obliterated. 

«  Kjndel,  op.  cit.,  p.  35. 


it: 


^ 


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Date  Due 

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COLUMBIA  UNIVERSITY  LIBRARIES 


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APR  241994 

APR  2  8  1927 


END  OF 
TIT 


